CONFIDENTIAL, BM/OCT 2016/ECO120/107/108/113 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE PRINCIPLES OF ECONOMICS COURSE CODE ECO120/107/108/113 EXAMINATION OCTOBER 2016 TIME : 3HOURS INSTRUCTIONS TO CANDIDATES This question paper consists of three (3) parts: PART A (20 Questions) PART B (4 Questions) PART C (4 Questions) 2. Answer ALL questions from PART A and PART B. Answers any two (2) questions from PART C, i) Answer PART A in the Objective Answer Sheet. ii) Answer PART B in the Answer Booklet. iii) Answer PART C in the Answer booklet. Start each answer on a new page. 3, Do not bring any material into the examination room unless permission is given by the invigilator. 4, Please check to make sure that this examination pack consists of : the Question Paper ‘an Answer Booklet — provided by the Faculty ‘an Objective Answer Sheet — provided by the Faculty v) a Graph Paper ~ provided by the Faculty 5. Answer ALL questions in english. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO D0 SO This examination paper consists of 10 printed pages (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 2 BM/OCT 2016/ECO120/107/108/113 PARTA 1. Economies is the study of ‘A. how to redistribute income equally in the society. B. howto stabilize the prevailing price level in the economy. C. how societies use of limited productive resources to satisfy unlimited wants. D. how to provide jobs for everyone in the labour force 2. Microeconomics is a branch of economics that studies ‘A. the distribution of goods among households B. the size of aggregate demand in the economy. C. budget deficits and surpluses. D. unemployment and inflation rate in the country. 3. The demand curve for car represents the relationship between A. quantity demanded and wages. B. quantity demanded and price of car. C. quantity supplied and price of car. D. quantity demanded and quantity supplied of car. 4. Which of the following will cause a movement along the supply curve for televisions? ‘A. Changes in sellers' expectations B. __ Increases in taxes per unit of output C. _ Increase in price of televisions D. Decrease in consumer's income 5. Ashortage occurs when the price is the market equilibrium price. A. below B. same as Cc. above D. moving toward 6. When a large proportion of income is spent on a good, the demand for the good is A. elastic. B. inelastic. C. perfectly elastic. D. perfectly inelastic. (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 3 BM/OCT 2016/ECO120/107/108/113 10, 1". 12. If the elasticity of supply is 1.2, it indicates that the supply is A. unitary elastic. B. elastic C. perfectly elastic. D. inelastic. When consumer's income increases by 5 percent, the demand for good A increases by 7 percent, then good A is a/an ‘A. luxury good. B. necessity good. C. normal good. D. _ inferior good. If the price elasticity demand for good X is perfectly inelastic, any increase in the price of a good X may cause the quantity demanded to ‘A. increase proportionately with it price. B. __increase faster than it price. C. increase less than it price. D. remain unchanged. Which of the following is not a factor of production? A. Computer B. Money Cc. Soil D. Carpenter Fixed inputs are factors of production that A. are determined by a firm's plant size. B. canbe increased or decreased quickly as output changes. C. cannot be increased or decreased as output changes in the short-run. D. are fixed in the long-run Which of the following market structures have the largest number of buyers and sellers? A. Oligopoly B. Perfect competition C. Monopoly D. —_ Monopolistic competition (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 4 BM/OCT 2016/ECO120/107/108/113 13, 14. 15, 16. 17. 18. The shape of the demand curve for a perfect competitive firm is ‘A. sloped downwards from left to right. B. sloped upwards from lef to right. C. perfectly inelastic. D. perfectly elastic. One of the goal of macroeconomics is to achieve the highest rate of unemployment. ensure disequilibrium of balance of payment. maintain the stability of general price level achieve the lowest economic growth. oom> ‘Suppose that a country exports RM1000 RM724 million of goods and services, what ion of goods and services and imports the value of its net exports? A. RM276 mil B. —-RM1724 million. C. M275 million. D. — -RM276 million. Real and nominal gross domestic product (GDP) are different because real GDP ‘A. includes the effects of unemployment changes in the economy. B. has been adjusted for changes in the price level. C. includes net factor income from abroad. D. excludes exports and indirect taxes. A deficit budget occurs when government expenditures are equal to revenues. greater than revenues. less than revenues. none of the above is true. pomp> ‘Which of the following group will gain during inflation? Creditors Pensioners Fixed income earners Borrowers 9Om> © Hak Cipta Universiti Teknologi MARA, CONFIDENTIAL,CONFIDENTIAL 5 BM/OCT 2016/ECO120/107/108/113 19. The type of unemployment that due to change in technology. disguised unemployment. cyclical unemployment. frictional unemployment. structural unemployment. pom> 20. Which of the following is the best description of a quota? An indirect business tax limit on the quantity of imported products A tax on imported goods ‘Agreements adopted by exporting nations to limit exports to another country pom> © Hak Cipta Universiti Teknolog! MARA CONFIDENTIAL,CONFIDENTIAL, 6 BM/OCT 2016/ECO120/107/108/113 PARTB QUESTION 1 The following are hypothetical demand and supply schedules for Good W in Sungai Petani. Price ‘Quantity Demanded ‘Quantity Supplied (RM/Unit) (Unit) (Unit) 10 1000 200 20 800 400 30 600 600 40 400 800 50 200 7000 a) Based on the data above, plot the demand and supply curves for Good W on a graph paper. (2 marks) b) Define market equilibrium. Determine the market equilibrium price and quantity. (2 marks) ©) Calculate the price elasticity of supply when price increases from RM10 to RM30 per units and interpret the answer. (3 marks) ) When consumer's income increases from RM3000 to RM4000, quantity demanded for Good W increases from 400 units to 600 units. Calculate the income elasticity of demand and identify the type of good for Good W. (3 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, QUESTION 2 BM/OCT 2016/ECO120/107/108/113 The table below refers the production cost of Syarikat Sonata Enterprise. ‘Quantity | Fixed Cost | Variable Cost | Total Cost | Average ‘Average (RM) (RM) (RM) Variable | Total Cost Cost (RM) (RM) 0 0 - : 7 20 2 35 3 50 16.67 4 20 5 700 24 Based on the table, answer the following questions. a) Complete the table above. (4 marks) b) Calculate the Marginal Cost (MC) and Average Fixed Cost (AFC) at 2nd unit of the product. ©) _Is the firm operating in short run or long run? Give your reason. d) Sketch the ATC, AFC, AVC and MC curves in a diagram. (© Hak Cipta Universit Teknologi MARA (2 marks) (2 marks) (2 marks) CONFIDENTIALCONFIDENTIAL 8 BM/OCT 2016/ECO120/107/108/113 QUESTION 3 ‘The figure below shows the short run profit maximizing position for a monopoly firm. Cost & Revenues (RM) Co) Quantity (units) 10 12 15 Label curve A and B. (1 mark) ‘The demand curve for a monopolist is inelastic. Why? (2 marks) State the profit maximizing output and price of the firm. Calculate the total revenue and total cost at this output level. (4 marks) Calculate the amount of profit or loss made by this firm at the equilibrium output. State the type of profit. (3 marks) (© Hak Cipta Universit Teknologi MARA CONFIDENTIAL,CONFIDENTIAL, 9 BM/OCT 2016/ECO120/107/108/113 QUESTION 4 The data below show components of national income for a country in the year 2015. Ttems RM (million) ‘Consumer consumption 45 Net factor income from abroad 20 Change in stocks 50 Government spending 20 Net exports 80 Transportation 30 Investment 60 Depreciation 5 Subsidies 70 [Indirect taxes 5 Calculate: a) Gross Domestic Product (GDP) at market price. (3 marks) b) Gross Domestic Product (GDP) at factor cost. (2 marks) ¢) Gross National Product (GNP) at factor cost. (2 marks) 4) National Income (NI). (1 mark) e) __List two (2) problems in calculating national income. (2 marks) {© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 10 BM/OCT 2016/ECO120/107/108/113 PART C QUESTION 1 a) Briefly explain the concept of scarcity, choices and opportunity cost using appropriate examples. (10 marks) b) Describe any five (5) non-price determinants of supply. (10 marks) QUESTION 2 a) Using an appropriate diagram, discuss market disequilibrium. (10 marks) b) With example, explain two (2) factors of economies of scale and two (2) factors of diseconomies of scale. (10 marks) QUESTION 3 a) _ Explain four (4) characteristics of monopoly market. (10 marks) b) Discuss five (5) uses of national income accounting. (10 marks) QUESTION 4 a) Define perfect competition. With the aid of diagrams, explain the types of profit earned by perfectly competitive firm in the short run. (10 marks) b) Discuss four (4) types of unemployment with example. (10 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,