MM5006 CONFIDENTIAL

MIDTERM EXAMINATION
SEMESTER II 2020/2021 SESSION

COURSE : BUSINESS ECONOMICS

COURSE CODE/ CLASS : MM5006 /MBA YP 63C
DATE : 21 APRIL 2021
VENUE : ONLINE HOME!
DEADLINE : 21 APRIL 2021 11:15 PM

Individual Assignment (60 marks)

Please answers theses following questions.

1. To what extent Covid 19 Pandemic affecting the Macroeconomy in Indonesia? (15 marks)

2. Related to the current covid 19 pandemic, to what extent Indonesia's Fiscal and Monetary
Policy allign with the reasoning and theory of modern macroeconomic. (15 marks)

3. In a study published in 1980, B.B. Gibson estimated the following price and income
elasticity of demand for six types of public goods:

State Activity Price Elasticity Income Elasticity

Aid to needy people -0.83 0.26
Pollution control -0.99 0.77
Colleges and universities -0.87 0.92
Elementary school aid -1.16 1.14
Parks and recreational areas -1.02 1.06
Highway construction and -1.09 0.99
maintenance

i. Do these public goods conform to the law of demand? For which public goods is
demand price elastic?
(5 marks)

ii. What types of goods are these public goods?

(5marks)
MM5006 CONFIDENTIAL

iii. If the price or cost of college and university education increased by 10 percent
and, at the same time, incomes also increased by 10 percent, what would be the
change in the demand for college and university education?
(5 marks)

4. India and Pakistan spend millions of dollars on defence. This money could instead be
used for productive purposes if both countries follow the disarmament strategy. Suppose
India follow the disarmament strategy and Pakistan does not, then India will be in a weak
situation against the strong situation of Pakistan, and vice versa. Considering the two
strategies of armament and disarmament, answer the following:
i. Write the payoff matrix for this problem.
(5 marks)

ii. Does either India or Pakistan have a dominant strategy? Explain.

(5 marks)

iii. In your view, what is the likely pair of decision and what payoff will each one
receive?
(5 marks)

Final Exam submission Rules

1. The format of the submission is Microsoft Word or MS Word file converted into PDF, or
PPT converted to PDF
2. You need to submit the answers before the deadline (21 April 2021 11:15 AM)
3. Late submission and video turn off during exam will be penalized

Good Luck.

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