BENCOD LING RM 8.95 - 180 - 1641 how 10.95 - 144 - 15768 CQD7001 ANSWER ALL QUESTIONS. Question 1 a. As the owner of a lunch diner, you know that you sell on average 180 lunches daily, for an average price of RM8.95. You are considering raising prices so that the average lunch will run RM10.95. You know from previous industry analyses that when the average prices is RM10.95, restaurants sell on average 144 lunches. Assuming that you respond like the industry, should you raise your price? Why or why not? (10 marks) b. Laser eye surgery to correct nearsightedness has been growing in popularity. Using a graph for the demand and supply model, discuss the effect on the price and quantity of laser eye surgeries performed if: a. The price of contact lenses declines b. Surgical techniques manage to reduce the side effects of laser eye surgeries c. More physicians complete training in laser eye surgery. (15 marks) (Total: 25 marks) TFC = 4000 fc = 4ovo Question 2 VC = 50 Q Johan Tool Company estimated the following demand equation for its product: - - TC Qd = 12,000 - 4,000P where , P=price/unit Qd = quantity demanded per year The firm's total cost are RM4,000 when nothing is being produced. These costs increase by 50 sen for each unit produced. a. Write the equation for the total cost function and the marginal cost function. (4 marks) b. Write the equation for total revenue in terms of Q and the marginal revenue function . (5 marks) 2/4P = 3000 - /4000 126500 - Q = 4800 p COD7001 c. At what level of output are total profits maximized? What price will be charged and what will total profit be? (6 marks) d. If the tools market operates in a monopolistic market, explain how the short run equilibrium of the firm transitions into the long run. Q = 12000 - 4 00 0p (10 marks) a - 12000 = - 4020 p ( Total: 25 marks) Question 3 P = 3 N - 0/ 40 00 The following figure illustrates the market share of smartphone vendors in Malaysia for Q2 2019 Smartphone vendors market share by sell-in NO = 0.5 shipments in Malaysia (Q2, 2019) Dow - 299 9.5 30% 27% 25% 20% Q = 59 9 9 000 20% 16% 15% 15% 12% 10% 10% 5% 0% Samsung " Oppo = Vivo Huawei |1 Xiaomi & Others Occ 1: 50.0 Source: Canalys, available at https://liveatpc.com/top-5-smartphone-brands- 2019. in-malaysia-q2-2019-apple-nowhere-to-be-found/ released on August 14, a) Compute the concentration ratio for the top four smartphone vendors in Malaysia (3 marks) b) Assuming that the market share for "Others" comprise seven smartphone vendors holding 2% market share each, and one vendor holding 1% market share (thus totaling 15% of the "Others" category), compute the Herfindhal- Hirschman Index of the Malaysian smartphone industry. (5 marks) c) What type of market structure is the smartphone market categorized as? - 0 1:gomaly (2 marks) 3/4 FCBBENCOD' LING 20 CQD7001 d) Discuss the characteristics of the smartphone market in the context in Malaysia, by analyzing (a) the number of firms in the market, (b) nature of the product, (c) barriers to entry, and (d) firm's control over price (15 marks) (Total: 25 marks) Question 4 Recognizing that there may be both positive and negative effects, how will our country's GDP and price level be affected by each of the events below? Explain whether the event will affect aggregate demand (AD), or aggregate supply (AS), or both. Demonstrate this in an AD-AS diagram. (note: each case is independent of each other). In the Budget 2020, the Malaysian government announced a RM1.6 billion expenditure to build new and upgrade existing hospitals. ~0 (5 marks) Malaysia is all out to adopt the fifth generation (5G) technology of mobile network which will result in a significant increase in productivity (with no change in nominal prices for factors of production). As (6 marks) b. In each of the scenario described below, determine the type of policy conducted by the government/central bank. Is the conduct of such policy appropriate to solve the economic problem in each scenario? Explain why or why not. (note: each scenario is independent of each other) During a period of inflation, Bank Negara Malaysia announces to reduce the statutory reserve requirement of depository institutions (7 marks) During a recessionary period, the Prime Minister announces in the federal budget that the personal income tax rate is to be increased by 5% across all income-tax brackets. Doscary rite (7 marks) - so thot bans sut more capital to allow loon ( Total: 25 marks) - lowe myerst rate so wave Reple will take loan - more transetins will be comed' out. END Exposing fisea nolig 4/4