QUESTION 4: CALCULATION QUESTIONS (15 MARKS).

1. Suppose the price of shirt increases from RM18.00 to RM22.00, quantity supplied for shirt

increases from 50 units to 150 units.

(i) Using the midpoint approach, calculate his price elasticity of supply. (3 marks)

(ii) Based on the answer above, interpret the value of the coefficient. (2 marks)

2. Last week, the price of face masks was RM3.00 per box and Mary purchased 10 boxes. Today, the

price has increased to RM4.00 per box and Mary decides to purchase 8 boxes.

(i) Using the midpoint approach, calculate the price elasticity of demand. (3 marks)

(ii) Based on the answer above, interpret the value of the coefficient. (2 marks)

3. When the price of smartphone decreases by 20%, the quantity demanded increases from 200 to

300 units of smartphone per month.

(i) Using the midpoint approach, calculate the price elasticity of demand. (3 marks)

(ii) Based on the answer above, should the seller increase the price of smartphone to earn higher

revenue. (2 marks)