OITPYP SECTION C-STRUCTURED QUESTIONS Answer Answer should be written in the answer booklet provided.
QUESTION 1:
Mr. Fim owned a smartwatch company in Melaka. He would like to know how the following events would influence the demand of smartwatches. Explain how each event would influence the demand of smartwatches in the Melaka market. Note: You are required to illustrate your answer with a graph for each event.
i. The price of smartwatches becomes lower due to a promotion offered by the company. (2.5 marks)
ii. It is expected that the number of smartwatch producers will increase in the next three months. (2.5 marks)
iii. The income of Melaka consumers reduced and smartwatches are a normal good in the Melaka market. (2.5 marks)
iv. The prices of smartwatches are expected to increase by 5% next month. (2.5 marks)
QUESTION 2:
a. The drastic increase in the price of cooking oil has caused an increase in the price of economy rice. The restaurants realized that the increased price of economy rice by 10 percent had caused the quantity demanded of economy rice to decrease by 5 percent.
Calculate the price elasticity of demand for economy rice. (3 marks)
b. Based on the answer in (a), is the demand for economy rice elastic or inelastic? Justify your answer. (2 marks)
QUESTION 3:
Exhibit 1 shows Edmand's utility schedules from consuming pens and pencils. The prices of pens and pencils are the same, i.e. RM0.50 each.
Exhibit 1: Utility Schedules for Edmand
Pens: Quantity - Total Marginal MU/P
Pencils: Quantity - Total Marginal MU/P
Based on Exhibit 1:
a. Calculate the total utility for pens and pencils. (5 marks)
b. Note: Please copy Exhibit 1 into your answer booklet for answer a and b. (5 marks)
c. Assuming that Edmand has RM4.50 to spend on pens and pencils, what is the combination of pens and pencils that Edmand should consume in order to maximize his satisfaction? Justify your answer. (3 marks)
d. Define utility. (2 marks)
QUESTION 4:
Identify and explain four types of market structures by providing an example for each type of market structure. (5 marks)
