FINAL

Examination Paper

(COVER PAGE)

Session : August 2018

Programme : BACHELOR OF ACCOUNTANCY (HONS) - BACCI

BACHELOR OF FINANCIAL PLANNING (HONS) – BFNPI
AUSTRALIAN DEGREE TRANSFER PROGRAMME
(COMMERCE) (DCMAUI)

Course : ECO2201/ECO274 : MICROECONOMICS

Date of Examination : December 06, 2018

Time : 3.00 pm – 5.10 pm Reading Time : 10 Minutes

Duration : 2 Hours and 10 Minutes

Special Instructions :

This paper consists of SEVEN (7) questions.

Answer ANY FOUR (4) questions.

Materials permitted :
Non-programmable calculator

Materials provided :
Nil

Examiner(s) : Abdul Aziz Bin Mohd Mustafa

Moderator : Genesh Kumar, Sukjeet Kaur, Adrian Tan

This paper consists of 7 printed pages, including the cover page.

 ECO2201/ECO274 (F) / Page 1 of 6

INTI INTERNATIONAL UNIVERSITY

BACHELOR OF ACCOUNTANCY (HONS) (BACCI)

BACHELOR OF FINANCIAL PLANNING (HONS) (BFNPI)
AUSTRALIAN DEGREE TRANSFER PROGRAMME (COMMERCE) (DCMAUI)
ECO2201 / ECO274 : MICROECONOMICS
FINAL EXAMINATION : AUGUST 2018 SESSION

Instructions: This paper consists of SEVEN (7) questions. Answer any FOUR (4) questions in
the answer booklet provided. All questions carry equal marks.

Question 1 (25%)

(a) “Studies on determinants of price elasticities can be found in the marketing literature with
the focus on alternative functional forms and broad product category. For example, Hoch
et al .(1995) used a log-linear function, while Mulhern, Williams, and Leone (1998) used a
negative exponential function to estimate price elasticities. However, these functional
forms have not so far been considered in a formal economics framework (Baltas, 2002).”
(Source: Determinants of Price Elasticities for Store Brands and National Brands of
Cheese, 2004)
Discuss above statement.
(8 marks)

(b) Identify and explain FOUR (4) types of resources with example.
(12 marks)

(c) Calculate Total Revenue (TR). Total Cost (TC) and Profit for XYZ firm.

Quantity Price Average Total Total Cost Profit

Cost Revenue
35 700 800
45 690 660
79 523 384
132 501 600 66,132 79,200
(5 marks)
 ECO2201/ECO274 (F) / Page 2 of 6

Question 2 (25%)

(a) A production possibilities table for two products, Phone and Laptop is found below. Usual
assumptions regarding production possibilities are implied.

Combination Phone Laptop (’00)

G 10,070 210
F 70,070 175
E 120,070 140
D 120,350 105
C 120,455 70
B 120,505 35
A 120,530 0
(i) Plot PPC Curve and identify the area attainable but inefficient (X), efficient (Y),
and unattainable (Z).
(6 marks)
(ii) Calculate opportunity cost:
(1) For 1 unit of Phone when firm move from combination B to F.
(2) For Phone when firm move from combination G to C.
(3) For 1 unit of Laptop when firm produce from combination A to E.
(4) For Laptop when firm produce from combination G to D.
(8 marks)
(iii) Using the new graph, illustrates the effect of the discovery of new types of iron, a
resource needed to make both phone and laptop on this economy.
(4 marks)

(b) Define Average Cost. Identify and explain THREE (3) types of return to scale.
(7 marks)
 ECO2201/ECO274 (F) / Page 3 of 6

Question 3 (25%)

Market research has revealed the following information about the market for Pearson Economic
Book in Malaysia;

Quantity Demanded Quantity Supplied Price

(Units) (Units) (RM)
(I) 20,574.7 (A)
131,311.1 27,592.6 (B)
90,028.7 (F) 5,680
(J) 25,724.3 (C)
150,827.54 (G) 761
79,905.86 (H) (D)
(K) 82,803.22 (E)
(a) Find function for Qd and Qs.
(6 marks)

(b) Find equilibrium price and quantity.

(4 marks)

(c) Find the value from A until K.

(11 marks)

(d) Draw the demand and supply curves. Make sure to include the correct labels for the graphs
and axis.
(4 marks)

Question 4 (25%)

(a) Fill in the below table in answer booklet provided. (use two decimal place)

MC AFC Q VC AC TC AVC
35 200
30 350
10 8.3 450
7 590
3 50 620
4 660
18 1,794
27 2,901
(19 marks)

(b) Plot FC, VC, AVC, AC & MC curve in ONE (1) graph.
(6 marks)
 ECO2201/ECO274 (F) / Page 4 of 6

Question 5 (25%)

The accompanying table shows the price and yearly quantity sold of Television in Kuala Lumpur
according to the average income of the tourists visiting.

Quantity of Quantity of Income Price of Quantity of Quantity of

Laptop B Laptop ($) A Television
demanded demanded demanded Supplied
3,000 3,102 5,000 1,320 400 4,000
2,800 2,830 4,000 1,540 600 4,200
2,530 2,750 2,500 1,800 725 4,360
1,995 2,650 1,800 2,330 832 4,480
1,460 2,540 1,270 3,160 1,230 5,325
(a) Cross price elasticity of demand (EXY) between laptop and good B when price decreases
from $2330 to 1320. What that value mean? What type of good is this?
(5 marks)

(b) Income elasticity of demand (Ei) for good A when quantity increases from 725 units to
832 units. What that value mean? What type of good is this?
(5 marks)

(c) Price elasticity of supply (ES) when quantity increases from 4200 units to 5325 units. What
that value mean? What type of supply curve is this?
(5 marks)

(d) Price elasticity of demand (Ed) when price increases from $900 to $935. What that value
mean? What type of demand curve is this?
(5 marks)

(e) Cross price elasticity of demand (EXY) between laptop and good A when quantity
decreases from 1230 units to 400 units. What that value mean? What type of good is this?
(5 marks)
 ECO2201/ECO274 (F) / Page 5 of 6

Question 6 (25%)

Suppose a pure monopoly firm is experiencing maximum profit/ minimum loss when:
(a) Quantity = 235 units
Average Fixed Costs (AFC) = $13
Total Revenue (TR) = $740
Total Costs (TC) = $500

(i) Identify whether firm experience economic profit, economic loss or shut down.
(0.5 mark)
(ii) Sketch graph based on your above answer.
(5 marks)
(iii) Based on the above graph (ii), show area for profit/loss.
(0.5 mark)
(iv) Calculate profit or loss.
(1 mark)

(b) Quantity = 750 units

Fixed Costs (FC) = $27,350
Marginal Revenue (MR) = $45
Average Variable Costs (AVC) = $37
Total Revenue (TR) = $25,000

(i) Identify whether firm experience economic profit, economic loss or shut down.
(0.5 mark)
(ii) Sketch graph based on your above answer.
(5 marks)
(iii) Based on the above graph (ii), show area for profit/loss.
(0.5 mark)
(iv) Calculate profit or loss.
(1 mark)

(c) Quantity = 1755 units

Fixed Costs (FC) = $340
Total Revenue (TR) = $530
Total Costs (TC) = $730
(i) Identify whether firm experience economic profit, economic loss or shut down.
(0.5 mark)
(ii) Sketch graph based on your above answer.
(5 marks)
(iii) Based on the above graph (ii), show area for profit/loss.
(0.5 mark)
 ECO2201/ECO274 (F) / Page 6 of 6

(d) Quantity = 35 units

Demand = $8
Fixed Costs (FC) = $104
Marginal Cost (MC) = $18
Total Costs (TC) = $420
Sketch graph based on your above answer.
(5 marks)

Question 7 (25%)

Using a demand and supply analysis, explain what might happen to the equilibrium price and
quantity for Pearson Economics Books in the following situations:

(a) An increase in the price of Pearson Accounting Books.

(5 marks)

(b) Price of paper decrease.

(5 marks)

(c) A decrease in the number of consumer.

(5 marks)

(d) Number of machine use to produce Books increase.

(5 marks)

(e) Consumer received information that the price of Oxford Economics Books will be
decrease next week.
(5 marks)

- The End -
ECO2201/ECO274( F)/AUG18/Aziz/040818