Test 2 (2.

5 hours) : Total mark: 100%

Answer ALL questions.
Question 1
Compare and contrast the market structure characteristics of a perfect competitive
market, pure monopoly, monopolistic competition, and oligopoly. Give examples of
each market structure exists in the Malaysian market and briefly explain why do you
say so.
(20 marks)

Question 2
Assume the price of product A increases from RM1 to RM1.50, while the price of
competing product B increases from RM1.50 to RM2.00. Based on the information,
what we can say about the absolute and relative price differences between the two
products and the relative attractiveness of the two products to consumers.
(20 marks)


Question 3
Assume an individual is considering opening a new car dealership in a medium-sized
metropolitan area (population = 200,000). Design a list of economic variables you
would recommend that the person consider in making his decision whether to open
the business, and explain your rationale for including each variable.
(20 marks)



Question 4
List and evaluate the sources of spending in an economy. Justify which one is
currently contribute the most to the GDP growth in the Malaysian economy.
(20 marks)



Question 5
Recently we have experienced subsidy cut or rationalization on several essential
goods such as sugar and petrol oil in Malaysia.

(a) Construct an economic argument that supports this measure taken by the
Government of Malaysia.
(10 marks)

(b) Evaluate how government could use the subsidy saving to boost the
economy.
(10 marks)