Problem I

a. (Max 5 Point)
Peq = Rp 170/unit Qeq = 6,600 units

b. (Max 5 Point)

c. (Max 5 Point)
If P = Rp 150/unit
Qs = 6,000 unit
Qd = 7,000 unit
There is an excess demand (shortage) in the market

d. (Max 5 Point)

Problem II (MAX POINT: 20 -4, 8,8-)

a. (Max 4 Point)
Peq = $ 4/unit
Qeq = 1,100 units

b. (Max 8 Point)

$12.8 i
S

$6 f g

$4 a e

c h D
b Q
440 8501,100
 CS = Area iae = ½ (12.8 – 4) (1,100) = $4,840
PS = Trapezoid area aehcb = (440 x 4) + ½ (4) (1,100 – 440) =
= 1,760 + 1,320 = $3,080

c. (Max 8 Point)
New CS = area ifg = ½ (12.8 – 6)(850) = $2,890
New PS = area fghcb = (6 x 850) – ½ (2.485) (850 – 440) = 5,100 – 509.425 = $4,590.6
The policy result in decrease in CS from $4,840 to $2,890 and increase in PS from $3,080 to
$4,590.6

2.485 is the price when quantity 850 unit

Problem III (MAX POINT: 20 -10 ,5, 5-)

a. (Max 810Point)
0.24 (in absolute value). Inelastic

b. (Max 5 Point)
The Total Revenue will increase if the nature of demand is inelastic. (The students may prove
it by using a diagram to get a higher score)

c. (Max 5 Point)
In the long run, the elasticity will increase as more substitute products available in the
market. Consumers will have more options and become more sensitive against price
changes.

Problem IV (MAX POINT: 20 -10, 10-)

a. (Max 10 Point)
When the price of bread rises, the demand for butter shift inward (to the left) while the
supply remains the same. Therefore, the quantity supplied, quantity demanded, and price
for butter are decreasing
 b. (Max 10 Point)
When the price of bread rises, the demand for rice shift outward (to the right) while the
supply remains the same. Therefore, the quantity supplied, quantity demanded, and price
for rice are increasing

Problem V (MAX POINT: 20 -7, 7, 6-)

a) (Max 7 Point)
Trade-off : a choice that a person has to pick (pilih A or B)
Opportunity cost: a cost incurred when an option has already been taken (get A at cost of
losing B)

b) (Max 7 Point)
Ideally, government can sometimes improve market outcome
Problem that the government needs to be tackled such as:
- enforce property rights → enforce rules and maintain institution
- promote efficiency → address market failure such as monopoly or
negative externality

c) (Max 6 Point)
A person’s standard of living depends on its ability to produce goods and services. This is
the general concept of productivity that accounts how many goods and services produced
from each person. The more he produces, the more he earns, the higher standard of living.