a. Read the news report below and answer the questions that follows.

Pollution problems at Pasir Gudang must end for growth to continue

By Tan Ai Leng- EdgeProp.my, August 08, 2019 20:51 pm +08

JOHOR BAHRU (Aug 8): Johor's Pasir Gudang will remain attractive to business owners and property buyers as long as the environmental issues that have plagued the area recently are resolved, said the Real Estate and Housing Developers' Association Malaysia Johor Branch (Rehda Johor).

Rehda Johor chairman Datuk Steve Chong Yoon On said at a press conference on Tuesday (Aug 6) that despite recent river and air pollution incidents in Pasir Gudang, the industrial town in the Southern state still has strong growth potential due to its good infrastructure and proximity to main ports.

The Johor state government has taken immediate action to manage the river and air pollution which occurred in June this year, which will help regain investors' confidence in Pasir Gudang, he said.

Pasir Gudang is one of the main industrial hubs in Malaysia for transportation, logistics, shipbuilding, petrochemical, palm oil storage and heavy industries.

Located in Johor Bahru district, the industrial town is close to Johor Port the largest palm oil terminal in the world, and Tanjung Langsat Port, which handles bulk cargo such as liquefied petroleum gas (LPG) and other chemical products.

Rehda Johor immediate past branch chairman Datuk Hoe Mee Ling added that the Johor state department of environment is currently seeking solutions to prevent such incidents in future.

Besides policies on existing factories, the authorities are also looking into pre-assessments to be carried out before business owners start their operations, she noted.

To re-cap, students of Sekolah Agama Taman Mawar, Pasir Gudang, suffered breathing difficulties and vomiting caused by air pollution in the area in June this year.

The incident happened three months after a 1.5 kilometre stretch of the Sungai Kim Kim river was polluted by toxic waste, affecting nearly 6,000 residents.

According to earlier news reports, Pasir Gudang is believed to be overcrowded, having a total of 2,000 factories, of which 257 are chemical-based factories. EdgeProp.my

In the light of the news report above, answer the following questions.

1. Why do you think chemical-product factories along the Kim Kim river channel their waste into the river?

(2 marks)

1. What would be the effect of this behaviour on the market for chemical products and resource allocation. Use a diagram to illustrate your answer.

(4 marks)

1. Discuss two policy solutions to deal with this issue. Illustrate the impact of these policy solutions on the market for chemical products and resource allocation. Please draw a separate diagram to answer this question.

(5 marks)

1. Briefly discuss two lessons that can be learned from this incident.

(2 marks)

b. Assume that a firm has a plant of fixed size and that it can vary its output only by varying the amount of labour it employs. The table below shows the relationships among the unit of labour employed (L) and the total product (TP) of the firm.

L TP AP MP TFC TVC TC AVC ATC MC

0 0

1 20

2 55

3 100

4 150

5 200

6 230

7 250

8 263

9 270

10 275

1. Compute the average product of labour (AP) and the marginal product of labour (MP) and enter these figures in the table.

(1 mark)

(ii) Assume that labour is the only variable input in the production, the price of labour is $200 per unit and the Fixed cost of the firm is $100. Complete the above table by computing the total fixed cost (TFC), total variable cost (TVC), total cost (TC), average variable cost (AVC), average total cost (ATC) and marginal cost (MC) for each quantity of labour the firm might employ.

(3 marks)

1. Using the output and costs data that you have computed above, sketch and describe the relationship between labour productivity curves and cost curves. What specific law of microeconomics can best explain this relationship?
2. marks)

1. The government is proposing to increase the level of minimum wage rate for workers. If you are the owner of this firm, what would be your concern on the issue.

(1 mark)

c) Majority of businesses are operating in a monopolistically competitive market. During economic crisis where demand for products sold by monopolistically competitive firms are declining, what two practical actions that businesses can do to maintain their sales? Provide specific examples in your answer.

(3 marks)

{End of Question Paper}