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1 STUDENT IDENTIFICATION NO MULTIMEDIA COLLEGE JALAN GURNEY KIRI KUALA LUMPUR FOUR SEMESTER FINAL EXAMINATION, 2014/2015 SESSION ECO2023 INTRODUCTION TO ECONOMICS DMGW-E-F-2/13, DMGS-E-F-2/13, DMGQ-E-F-2/13, DMGA-E-F-2/13, DMGT-E-F-2/13 9 FEBRUARY AM AM (2 HOURS) INSTRUCTION TO STUDENT 1. This Examination paper has FOURTEEN (14) printed pages. 2. This question paper consists of THREE (3) sections. Section A : Answer ALL questions. Section B : Answer ALL questions. Section C : Answer TWO (2) questions ONLY. 3. Please write all your answers in the Answer Booklet provided.

2 SECTION A : MULTIPLE CHOICE QUESTIONS (40 MARKS) INSTRUCTION : ANSWER ALL QUESTIONS. 1. Followings are the basic economic concepts, EXCEPT: A. Scarcity B. Choices C. Opportunity cost D. Technology growth 2. What is the best description about Macroeconomics? A. Studies about individual units B. It is a concept for our daily lives C. Studies of a economy system as a whole D. It produces choices and decision making of an individual 3. In the production possibilities curve (PPC) there is some area for unattainable. A. outside the any point along the ppc B. inside the ppc C. any point along the ppc D. movement from one point to another point 4. Given the decreasing opportunity cost, the PPC is. A. concave B. convex C. linear D. horizontal line 5. There are three(3) types of classification of goods and services. Which examples below shows the free goods? A. schools B. sunlight C. houses D. car CFCK/NAM/SH/SAS/NN Page 2 of 14

3 6. The law of demand states the price of a product, the the quantity demanded. A. higher, lower B. moderate, higher C. higher, higher D. lower, lower 7. When the price of pens increase, the quantity demanded for pens will fall, the demand for ink also decrease. What is the relationship between pens and ink? A. Substitute goods B. Inferior goods C. Complementary goods D. Normal goods 8. If the price of bags increase from RM30 to RM40 and the quantity supplied increase from 50 to 60 units, calculate the price elasticity of supply? A. 0.6 B. 0.5 C. 0.4 D At equilibrium price. A. quality ss may exceed quantity dd or vice versa B. there are no pressures upon price to either rise or fall C. there are forces which tend to cause price to rise D. there are forces which tend to cause price to fall 10. Price is currently above equilibrium. This will create excess. we would expect price to A. demand, increase B. demand, decrease C. supply, increase D. supply, decrease CFCK/NAM/SH/SAS/NN Page 3 of 14

4 11. Black Market are associated with. A. minimum price and resulting product surpluses B. minimum price and resulting product shortage C. maximum price and resulting product surpluses D. maximum price and the resulting product shortage 12. If there is a surplus of product X, we can predict that. A. fewer resources will be allocated to the production of this good B. the price will rise C. the price will decline D. the ss curve will shift to the left and the dd curve to the right thereby, eliminating the shortage. 13. Marginal utility. A. increases as more of a product is consumed B. decreases as more of a product is consumed C. is zero when total utility is at maximum D. is equal to total utility divided by the number of unit consumed 14. When the marginal utility is positive, the total utility. A. decreases B. increases C. at maximum D. zero 15. As more product is consumed, the consumer marginal utility. A. remain constant B. increases C. diminishes D. all the above CFCK/NAM/SH/SAS/NN Page 4 of 14

5 16. If the price of all good increases by the same proportion as income then the quantity of good demanded will. A. decreases B. increases C. will change by same proportion D. not change 17. In which of the following industry structure is the entry of new firms the most difficult? A. Monopoly B. Oligopoly C. Perfect Competitive D. Monopolistic Competition 18. Which of the following related to monopolistic competition? A. Firms producing complementary goods B. Firms producing closed substitute goods C. Firms producing standardized goods D. Firms producing differentiated goods 19. In oligopolistic market. A. product may be standardized or differentiated B. mutual interdependence among the firms C. only few firms dominates the market D. all of the above 20. Which of the following indicates the similarity conditions in monopolistic competition and oligopoly? A. The number if the seller B. The kinked demand curve analysis C. Non-price competition D. Mutual interdependence exists among firms CFCK/NAM/SH/SAS/NN Page 5 of 14

6 21. Macroeconomics is concerned with the study of A. Malaysian s response towards changes in the price of sugar B. production methods and costs C. the effect of reduction of wages on services sector D. the general price level 22. is referred as a four-sector economy. A. A closed economy B. An open economy C. A simple economy D. An injection 23. Which of the following are the FOUR(4) main components of macroeconomics? A. Labour, Firms, Government, Companies B. Household, Firms, Government, Rest of the world C. Household, Export - Import, Government, Companies D. Household, Firms, Taxes, Companies 24. Government policies regarding taxes and expenditures are called. A. fiscal policies B. growth policy C. monetary policy D. supply side policy 25. A perfectly elastic demand curve is a characteristic feature of. A. oligopoly B. monopoly C. monopolistic competition D. perfect competition CFCK/NAM/SH/SAS/NN Page 6 of 14

7 26. A firm faces a perfectly elastic demand curve if. A. MC = MR B. MR = AR C. AR = MC D. ATC = AVC 27. The demand curve for an individual firm in purely competitive is and demand curve for the industry is. A. perfectly elastic, perfectly inelastic B. perfectly elastic, downslopping C. downslopping, perfectly inelastic D. downslopping, perfectly elastic 28. A monopolist will maximize profit in the short run when marginal cost is equal to. A. average total cost B. average variable cost C. total revenue D. marginal revenue 29. In a monopolistically competitive market, there will be. A. a single product and price B. a product group and a range of prices C. a product group and a single price D. none of the above 30. The products produced in monopolistic competition are. A. complimentary goods B. close substitutes goods C. standardized goods D. differentiated goods CFCK/NAM/SH/SAS/NN Page 7 of 14

8 31. Oligopoly is a market where there are. A. many sellers B. few sellers C. few buyers D. one seller 32. In oligopolistic market,. A. product may be standardized or differentiated B. mutual independence among the firms C. only a few firms dominate the market D. all of the above 33. Which of the following is TRUE about taxes? A. One of the objectives is to split the equitable distribution of income. B. Taxes will increase as the price increase. C. There are three types of taxes including direct taxes, indirect taxes and straight taxes. D. Taxes are a source of income for a country. 34. The following is TRUE about indirect taxes, EXCEPT: A. it is imposed at the same rate of all income. B. the goods and services tax (GST) is an example of indirect taxes. C. indirect taxes will make a customer to pay more for the product. D. the taxes burden can be passed to another person. 35. National debt can be from internal and external source of the country. Which of the following is an external source of national debt? A. Borrowing from financial institution. B. Loans from commercial bank. C. Currency loans from foreign government. D. Borrowing from citizen. CFCK/NAM/SH/SAS/NN Page 8 of 14

9 36. Which of the following is an instrument for monetary policy? A. Interest rate. B. Taxes. C. Government expenditure. D. None of above. 37. Inflation is when. A. a reduction in the unemployment rate. B. a decrease in the general price level of goods and services. C. an increase in the general price level of goods and services D. the price of goods and services are stable. 38. Which of the following is NOT true about peak in business cycle? A. Full employment. B. Maximum output of production. C. Lowest unemployment rate. D. The real GDP decrease. 39. happen when the unemployment is because of the changes in demand patterns or obsolescence of technology. A. Frictional unemployment. B. Structural unemployment. C. Seasonal unemployment. D. Cyclical unemployment. 40. If the number of people employed is 170,000 and the labor force is 240,000, the unemployment rate is. A. 7.08% B. 2.91% C. 1.41% D. 0.41% CFCK/NAM/SH/SAS/NN Page 9 of 14

10 SECTION B : SHORT QUESTIONS (20 MARKS) INSTRUCTION : ANSWER ALL QUESTIONS. Question 1 Briefly explain what the meaning of direct tax and indirect tax is. Give ONE (1) example each. Question 2 Differentiate between Microeconomics and Macroeconomics. Question 3 Explain any TWO (2) external factor affecting demand. Question 4 Table below shows the relationship between the price of good X and the quantity demanded for goods J, K and L consumed by a household. Price of Good X (RM) Quantity Demanded (Unit) Good A Good B Good C CFCK/NAM/SH/SAS/NN Page 10 of 14

11 Based on the information above, answer the following questions; a) Define: i Cross elasticity of Demand (1 Mark) ii Income elasticity of demand (1 Mark) b) If the price of good X decreases from RM40 to RM20, calculate the cross elasticity of demand for : i ii Good X and A Good X and B (1 Mark) (1 Mark) Question 5 Briefly explain TWO (2) factors of production in a company. CFCK/NAM/SH/SAS/NN Page 11 of 14

12 SECTION C : LONG QUESTIONS (40 MARKS) INSTRUCTION : ANSWER TWO (2) QUESTIONS ONLY. Question 1 The following shows the national income data for an economy in Year Items RM Whole sale and retail 22,500 Mining and gas 13,300 Construction 37,500 Manufacturing 25,110 Agriculture and forestry 25,000 Banking and insurance 25,500 Factor payment from abroad 13,040 Other services 5,500 Taxes on expenditure 1,500 Factor payment to abroad 13,500 Depreciation 1,150 You are required to: a) Gross domestic product at market price. b) Gross domestic product at factor cost. c) Gross national product at market price. d) Net national product at market price. e) National income. CFCK/NAM/SH/SAS/NN Page 12 of 14

13 Question 2 In an economic four sector, consumption of household is C = Yd,Investments (I) = 300, government spending (G) = 100, taxes (T) = 0.2Y, export X = 200 and import M = Y with Yd as income (All the valueis at Million) a) Calculate the national income equilibrium in this economic? b) What is is the meaning for national income equilibrium? c) How much is the nation import when the economic achieve equilibrium? d) What kind of economic role to add its net export? (6 Marks) ( 4 Marks) (6 Marks) Question 3 a) List down and explain FOUR (4) factors of productions. b) Table below shows the production cost of the furniture company in East-Blue. Total Product Total variable cost Total cost Marginal cost Average total cost Average variable cost (8 Marks) Average fixed cost i Fill up the table above. (10 Marks) ii What is the fixed cost for this company? (2 Marks) CFCK/NAM/SH/SAS/NN Page 13 of 14

14 Question 4 The table shows the demand and supply for chicken in Klang Valley. PRICE (RM) QUANTITY DEMANDED (UNITS) QUANTITY SUPPLIED (UNITS) a) Using the data given, illustrate the demand and supply curve. Shows the equilibrium, surplus area as well as the shortage area in a same graph. (6 Marks) b) State the equilibrium price and quantity. (2 Marks) c) Based on the situation below, illustrate and explain the effect of the changes in demand. i. Hari Raya festival is around the corner. ii. The price of chicken is drop. (8 Marks) d) If the government sets a price ceiling for chicken for RM 4, what will happen to the market demand?illustrate the graph that shows the situation above. End of Page. CFCK/NAM/SH/SAS/NN Page 14 of 14