CHAPTER 1

1. Define economics. What is the difference between microeconomics and macroeconomics?

1. Determine whether each of the following would cause the economy's production possibilities curve (PPC) to shift inward, outward or not at all;
   1. A decrease in average length of annual vacations
   2. An increase in the average retirement age
   3. The migration of skilled workers to other countries

1. Explain each of the following concepts with the help of a diagram
   1. Ceiling price
   2. Floor price

4. Explain and give examples:

1. Free goods
2. Economic goods
3. Public goods

5. What variables influence the demand for a normal good? Explain why a reduction

in the price of a normal good does not increase the demand for that good.

1. Popeye's income declines and as a result, he buys more spinach. Is spinach an inferior or normal good? Illustrate what happens to Popeye's demand curve for spinach.

1. Using supply and demand curves, show the effect of each of the following events on the market for cigarettes.
2. A cure for lung career cancer is found.
3. The price of cigarette increases.
4. Wage increases substantially in states that grow tobacco.

CHAPTER 3

ESSAY QUESTIONS

1. Explain how seller can determine whether the demand for his or her good is inelastic, elastic or unit elastic between two prices.

1. Is the price elasticity of supply usually larger in the short run or in the long run? Explain your answer.

3. List 4 determinants of price elasticity of demand with explanation

1. Name some types of goods and services that consumers will respond to in event of a price change which may be elastic or inelastic. Explain how the response towards price can be elastic or inelastic.

CHAPTER 4

ESSAY QUESTIONS

1. Describe utility. Differentiate between cardinal utility and ordinal utility.

1. Suppose that James and Staniel have each decided to allocated RM1000 per year to an entertainment budget in the form of hockey games or rock concerts. They both like hockey games and rock concerts and will choose to consume positive quantities of both goods. However, they differ substantially in their preference for theses two forms of entertainment. James prefer hockey games to rock concerts, while Staniel prefers rock concert to hockey games.
   1. Draw a set of indifference curve for James and a second set for Staniel
   2. Using the concept of marginal rate of substitution, explain why the two sets of curves different from others.

1. Explain "Before economic growth, there were too few goods, after growth, there is too little time.

4. Explain why consumer equilibrium is equivalent using marginal utility and indifference curve analysis.

CHAPTER 5

ESSAY QUESTIONS

1. Differentiate between an implicit cost and an explicit cost. Give examples.

1. The average variable cost curve and the average total cost curve get closer to each other as output increases. What explains this?

1. Answer TRUE or FALSE with BRIEF EXPLANATIONS.

1. Firm should continue to produce to maximize output even though marginal cost is failing.

1. Average product will be negative when marginal product negative.

1. Average product is at maximum when it crosses with marginal product.

4. Explain the four factors of production with examples.

CHAPTER 6,7 & 8

ESSAY QUESTIONS

1. Describe and explain FIVE (5) characteristics of each market structure:
2. Perfect competition
3. Monopoly
4. Monopolistic competition
5. Oligopoly