QUESTION 1

1. Illustrate the Production possibilities curve and identify the points that represent scarcity, choices and inefficiency.

1. Distinguish ceiling price and floor price with relevant example.

1. Distinguish between changes in quantity demanded and changes in demand with proper diagram.

1. Explain how the following events influence Malaysia production possibilities curve.
   1. Some retail workers are re-employed building dams and wind farms
   2. More people take early retirement
   3. Drought devastated Kuala Lumpur's economy
   4. Population in Seremban increase due to migration

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1. Explain how mixed economy system help solved economic problem.

China will become the world's largest luxury good market

With their fast-rising incomes, Chinese consumers will overtake those in today's rich economies to become the world's biggest spenders on luxury goods. They will rebalance their budgets in a gradual move from saving to consuming.

Wi

1. In your opinion, are luxury goods normal goods or just not necessities? Explain your answer

After wild weather, higher food prices on horizon

After heavy rain this year, the corn harvest will be less than expected while the demand for corn will continue to increase. Food prices will continue to rise.

Wi

1. Using the demand and supply model, explain why food prices are expected to rise.

Answer ALLthe questions given below. Show your workings.

Price (RM/carton)	Market Demand (Cartons per day)	Market Supply (Cartons per day)
1.00	200	110
1.25	175	130
1.50	150	150
1.75	125	170
2.00	100	190

1. What is the equilibrium price and equilibrium quantity of milk?

2.Plot the market demand and supply curve for milk.

3Suppose the government is imposing a price control of RM1 on thecarton of milk.

1.What is this legal price called?

2.How much will the shortage or surplus be

4.Calculate the price elasticity of demand for milk, if the price of milkincreases from RM 1.25 to RM 2.00 and indicate whether the demand is elastic or inelastic?

5.If milk becomes more popular and better feeds increase milk production, describe how the equilibrium price and quantity of mill will change