QUESTION 1

More popular consumer items to be added into controlled goods list KUALA LUMPUR: Egg prices are expected to stabilise from today onwards, assured the Agriculture and Agro-Based Industry Ministry.Its Minister Datuk Seri Salahuddin Ayub said the price of various grades ofchicken eggs will come down by 2 sen. This follows an agreement with the Federation Of Livestock Farmers Associations Of Malaysia (FLFAM) last Friday on the matter. "Egg distributors had agreed to decrease price of eggs at the field by 2 sen to stabilise the price of eggs in the market. "This is also to ensure that the supply of eggs in the market is sufficient for this upcoming festive season," he said during a press conference at Parliament House today. He noted that the rise in egg prices was caused by the incident's of chicken deaths at farms which were initially suspected to involve the avian flu H5 and H7. "The chicken farms that had this incident of high number of deaths were not allowed to sell eggs until completion of investigation and outcome of result from laboratory (testing) to ensure there is no infection. "This situation caused a drop in egg supply by 3 per cent. However, investigation showed that the chicken farms were free from bird flu. "The chicken deaths were caused by a disease that commonly attack the animals," he said. Salahuddin said that the rise in chicken egg prices was also due to unfavourable monetary exchange rate in November."This caused a rise (cost) of imported animal feed which in turn led to a rise in the cost of egg production and in turn the rise in prices of 5 per cent," he said.

a) Define demand and supply. (2 marks)

b) Based on the above article, explain two reasons that give rise to chicken egg prices. (4 marks)

c) With the help of an appropriate diagram, illustrate how the chicken egg price rises. (4 marks)

d) Explain TWO (2) other factors that may cause the increase in the price of egg. (2 marks)

e) Is the demand for chicken egg elastic? Explain.