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    Exercise Pre Mid-Test

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    Abbas Om
    This document contains an economics exercise with multiple questions related to production possibilities curves, market demand and supply, price controls, elasticity of demand, and income elasticity. Specifically: 1) It asks the student to analyze a production possibilities curve diagram and calculate opportunity costs of production changes. 2) Using market demand and supply schedules for apples, it asks the student to plot the market curves, find the equilibrium price and quantity, and analyze the impact of a price control. 3) Given a schedule showing quantity demanded of goods A, B, and C at different prices and income levels, it asks the student to calculate price and cross elasticities and determine income elasticities to classify the

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    Exercise Pre Mid-Test

    Uploaded by

    Abbas Om
    10 views3 pages
    This document contains an economics exercise with multiple questions related to production possibilities curves, market demand and supply, price controls, elasticity of demand, and income elasticity. Specifically: 1) It asks the student to analyze a production possibilities curve diagram and calculate opportunity costs of production changes. 2) Using market demand and supply schedules for apples, it asks the student to plot the market curves, find the equilibrium price and quantity, and analyze the impact of a price control. 3) Given a schedule showing quantity demanded of goods A, B, and C at different prices and income levels, it asks the student to calculate price and cross elasticities and determine income elasticities to classify the

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    This document contains an economics exercise with multiple questions related to production possibilities curves, market demand and supply, price controls, elasticity of demand, and income elasticity. Specifically: 1) It asks the student to analyze a production possibilities curve diagram and calculate opportunity costs of production changes. 2) Using market demand and supply schedules for apples, it asks the student to plot the market curves, find the equilibrium price and quantity, and analyze the impact of a price control. 3) Given a schedule showing quantity demanded of goods A, B, and C at different prices and income levels, it asks the student to calculate price and cross elasticities and determine income elasticities to classify the

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views3 pages

    Exercise Pre Mid-Test

    Uploaded by

    Abbas Om
    This document contains an economics exercise with multiple questions related to production possibilities curves, market demand and supply, price controls, elasticity of demand, and income elasticity. Specifically: 1) It asks the student to analyze a production possibilities curve diagram and calculate opportunity costs of production changes. 2) Using market demand and supply schedules for apples, it asks the student to plot the market curves, find the equilibrium price and quantity, and analyze the impact of a price control. 3) Given a schedule showing quantity demanded of goods A, B, and C at different prices and income levels, it asks the student to calculate price and cross elasticities and determine income elasticities to classify the

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    ECO120 1 EXERCISE

    PART B

    QUESTION 1

    The diagram below shows the production possibilities curve of QRZ Company.

    a) Determine the type of opportunity cost faced by the company. Justify your answer
    (2 marks)

    b) State whether it is possible for the company to produce 800 units of jeans and 500
    units of pillows at the same time. Give a reason.
    (2 marks)

    c) Calculate the opportunity cost by increasing the production of:

    i) Pillows from point A to C


    ii) Jeans from point C to B
    iii) 400 of Pillows (3 marks)

    d) Referring to the diagram above, which combination represent:

    i) Full employment:
    ii) Inefficient point:
    iii) Unattainable point: (3 marks)
    ECO120 2 EXERCISE

    QUESTION 2

    The following table shows the individual demand and supply schedules of apple in the market

    Price (RM/kg) Quantity demanded (kg) Quantity supplied (kg)


    Sara Qarizh Nadirah Seller 1 Seller 2
    6 30 20 15 10 5
    0
    4 20 23 12 15 15
    0
    5 17 18 10 30 15
    0
    6 15 12 8 25 35
    0
    7 10 6 9 45 30

    0 on the information provided, plot the market demand and supply curves for apple.
    a) Based
    0 (2 marks)
    0
    b) Determine the market equilibrium price and quantity for apple.
    (1 mark)

    c) Suppose the government is imposing a price control of RM4:

    i) What is the legal price called?

    ii) Determine whether there will be a surplus or shortage in the market.

    iii) Calculate the amount of surplus or shortage.


    (3 marks)

    d) Due to the health report saying that eating apple can improve immune system, the
    market demand for apple increases by 25 kg at every price levels. Calculate the new
    market demand for apple and state the new equilibrium price and quantity.
    (2 marks)

    e) Give any two (2) determinants of price elasticity of supply.


    (2 marks)
    ECO120 3 EXERCISE

    QUESTION 3

    The schedule below shows the relationship between consumer’s income and the quantity
    demanded for good A, B and C. Answer the following question.

    Price of Good A Quantity demanded (units) Consumer’s


    (RM/unit) Good A Good B Good C income/month (RM)
    10 100 800 10 2000
    8 50 500 20 1800
    6 25 250 40 1500
    4 20 200 80 1200
    2 18 180 150 1000

    a) Calculate the price elasticity of demand for Good A when its price increases from
    RM4 to RM6.
    (2 marks)

    b) Calculate the cross elasticity of Good B when the price of Good A decreases from
    RM8 to RM4.
    (2 marks)

    c) What is the relationship between Good A and Good B? Justify your answer.
    (2 marks)

    d) Calculate the income elasticity of Good B and Good C when income increases from
    RM1000 to RM1800. What type of Good B and C?
    (4 marks)

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