SECTION A

OBJECTIVE QUESTIONS

ANSWER

1.C

2.B

3.B

4.D

5.D

6.D

7.D

8.B

9.B

10.B

11.C

12.D

13.D

14.B

15.C

16.B

17.D

18.A

19.A

20.D

21.D

22.B

23.D

24.D

25.C

SECTION B : 75 MARKS

BAHAGIAN B : 75 MARKAH

QUESTION 1(a)

i. State the definition of:

ANSWER

1. Demand

Demand is defined as the ability and willingness to buy specific quantities of good and service at a given period of time at particular price, ceteris paribus

2. Law of demand

Assuming all factors are equal, ceteris paribus when price goes up quantity demanded supplied goes up, quantity demanded will increase.

3. Individual demand

Individual demand is the relations the quantities of a product demanded by add a single individual and its price in a given period time.

3. Market demand

Market demand is the relationship between the total quantities of product demande by adding all the quantities demanded by all customers in the market at a certain price in a given period of time. Market demand is combination of the individual in the market.

ii. List FOUR (4) factors that influence the shift of a supply curve.

ANSWER

Price of other good Production cost Technology Weather Expectation of Future Price Producer goal & expectations Number of producers

QUESTION 1(b)

The function of market demand and supply of X product are given as follows:

Qd = 30-3P

Qs = 2P

i) Determine the market equilibrium price and quantity.

ANSWER

Qd = Qs/30 – 3P = 2P/

P = 30/5 / P = RM6 /

Qd = 30 – 3P/ = 30 – 3 (6) / = 30 – 18/ =12 units

OR

Qs = 2P = 2 (6) 12 units

Equilibrium price = RM6

Equilibrium quantity = 12 units

ii) If the market price is RM5, calculate the amount of consumer expense of X product.

ANSWER

At price of RM5,

Qd = 30 – 3P / = 30 – 3 (5) / = 30 – 15 /

=15/Consumer will expenses 15 units of X product

iii) Function of market demand is change to Qd = 45 – 3P. Calculate the new market equilibrium price an quantity.

ANSWER

Qd = Qs/ 45 – 3P = 2P /

45 = 5P / P = 9 //

OR

Qs = 2P =2 (9) =18

Equilibrium price = RM9Equilibrium quantity = 18 units

Iv) Sketch the market equilibrium curve before and after of changing.

QUESTION 2 (a)

i) Compute the price elasticity of demand of good X when the price decreases from RM5 to RM4

ANSWER

Ed = Q2-Q1 X P1 Q1 P2 – P1

= 140-110/ X 5/ 110 4-5

= 30/110/ X 5/-1/

= -1.36//

ii) If the price of X increase from RM 4 to RM 5, compute the cross elasticity of demand between good X and YANSWER

Ed = Qy2-Qy1/ x Px1 / Qy 1 Px2 – Px1

= 40-80 / X 4/ 80 5-4

= 40/80/ X 4/1/ = -2 //

iii) Describe the relationship for good X and Y

ANSWER

Good X and Y are complementary good/because the value is negative/

iv) Calculate the income elasticity of demand for good Z when the income increases from RM1,000 to RM1,500

ANSWER

Ey = Q2-Q1/ X Y1/ Q1 Y2 – Y1

= 110-100/ X 1000/ 100 1500-1000

= 10/100/X 1000/500 / = 0.2 //

v) Given the price elasticity of supply of a product is 2.5, compute the percentage change in quantity supplied if price increases by 20%?

ANSWER

Es = % change of Q / % change of P

2.5 = % change of Q/ 20 %

% change of Q = 50 % //

QUESTION 2 (b)

i) Complete the table below

ANSWER

Labor Land Total Product Average Product

Marginal Product

1 5 7 8 // - //2 5 15 7.5 // 8 //3 5 24 8 // 9 //4 5 32 8 // 8 //5 5 37 7.4 // 5 //6 5 41 6.8 // 4 //7 5 45 6.4 // 4 //8 5 46 5.8 // 1 //9 5 46 5.1 // 0 //

10 5 45 4.5 // -1 //

ii) Using graph paper, illustrate the law of diminishing marginal returns diagram based on the table given

iii) Choose whether the firm is operating in the short run or long run

ANSWER

Firm is operating in the short run/

QUESTION 3 (a)

i) Complete the table

ANSWER

Quantity / Kuantiti(RM)

Total Cost /Jumlah Cost

(RM)

Average Total Cost/

Jumlah Kos Purata(RM)

Marginal Cost/Kos Marginal

(RM)

0 40 0 // 40 //1 48 48 // 8 //2 57 28.5 // 9 //3 69 23 // 12 //4 82 20.5 // 13 //5 96 19.2 // 14 //6 111 18.5 // 15 //

ii) Sketch average cost and marginal cost based from the table

QUESTION 3 (b)

i) Indentify which market structure the firm operates and provide ONE (1) example of a product

ANSWER

Perfect competition marketExample : Corn / Four / Vegetables //

ii) Explain (2) unique characteristic of this market structure

ANSWER1) Many sellers and buyers/ Explanation2) Selling identical / homogeneous product./ Explanation

iii) Compute the amount of profit or loss at the equilibrium point.

ANSWER

Profit = TR – TC/

TR = AR X Q /= 180 X 30 /= 5400Profit = 4500 – 5400/= -900/ (Subnormal Profit / Loss) /