INTERNATIONAL UNIVERSITY (IU) Course: Introduction to Micro Economics (BA117IU)

School of Business -----0-----

MID-TERM EXAMINATION
Date: 9th November 2021
Duration: 1 week
Student ID: ........................................... Name:................................................

SUBJECT: INTRODUCTION TO MICRO ECONOMICS (BA117IU)

Dean of School of Business Lecturers

Assoc. Prof. Nguyen Van Phuong

Dr. Cao Minh Man
Dr. Huynh Thi Ngoc Hien

GENERAL INSTRUCTION(S)

1. This is an open-book examination;

2. Plagiarism is strictly prohibited;
3. File type: word .doc or .docx. Please name the file as follows: Fullname_ID_Class_MidMicro
4. Deadline: 6pm 13rd Nov 2021. Late submission will NOT be accepted for any reason.
5. This exam paper consists of 02 sheets in total.
6. The exam has a total of 100 points.

GOOD LUCK!

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INTERNATIONAL UNIVERSITY (IU) Course: Introduction to Micro Economics (BA117IU)
School of Business -----0-----
QUESTION 1: (35 points)
Consider the market for minivans. For each of the events listed here, identify which of the
determinants of demand or supply are affected. Also indicate whether demand or supply
increases or decreases. Then draw a diagram to show the effect on the price and quantity of
minivans.
a. People decide to have more children. (7 points)
b. A strike by steelworkers raises steel prices. (7 points)
c. Engineers develop new automated machinery for the production of minivans. (7 points)
d. The price of sports utility vehicles rises. (7 points)
e. A stock-market crash lowers people’s wealth. (7 points)
QUESTION 2: (Word limit: approximately 450, and maximum 800 words) (35 points)

Using the concepts of trade, demand, supply, and market explains why the price of food has
increased so much in Ho Chi Minh City during the social distancing lockdown.
What did you learn from the lockdown time?

QUESTION 3: (Word limit: maximum 300 words) (30

points)

Read the following passage and answer two given questions.

Face masks market during Covid-19 Pandemic

In two first quarters of 2020, the COVID-19 has inflated the price of medical face masks in
Vietnam 5-7 times its original price, according to Tuoitrenews. The average price level before
the virus was about VND40,000 per box, but during that period it is VND200,000-300,000, with
some even at VND350,000. These face masks often have little proof of origin and have no listed
price on the shelves. Some local medical stores are suspected to have taken advantage of the
current situation to make profit, and some have even withheld their supply of face masks to wait
for prices to increase. Despite the absurd price of this common good, customers (especially in
Hanoi and Ho Chi Minh City) are still lining up, allowing stores to raise the prices even higher.

Given frequently changing business practices and local COVID-19 transmission and vaccination
rates, masks will likely remain useful right now. Fortunately, in contrast with early on in the
pandemic, these days you have many high-quality options to choose from. Between disposable
respirators and comfortable, reusable cloth masks that filter nearly as well as medical-grade
masks (and can be adjusted for a more-secure fit), just about everyone can find something they
feel good wearing. This help release the heat of the face mask market.

a. How can you describe the price elasticity of demand of medical face masks in the two
first quarters of 2020 and right now? What factor(s) would likely explain this? (15 points)
b. If the government imposes a binding price ceiling on the price at which a medical face
mask box can be sold. Explain how does this decision affect the face mask market efficiency?

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INTERNATIONAL UNIVERSITY (IU) Course: Introduction to Micro Economics (BA117IU)
School of Business -----0-----
(15
points)

-------THE END------

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