SP School of Business 2021/2022

Student’s copy

TUTORIAL WORK SHEET

Course : DAC, DBKF, DBA, DHRMP, CBP
Subject : BA0508 ECONOMICS
Tutorial : 5
Topic : MARKET EQUILIBRIUM 2

BEFORE THE TUTORIAL HOMEWORK

Video Lecture
As preparation to participate in the activities during the tutorial, you are required to watch
the video lectures regarding the topic.

1. AY2018 Market Equilibrium 2 – Part 1 Changes in demand

2. AY2018 Market Equilibrium 2 – Part 2 Changes in supply
3. AY2018 Market Equilibrium 2 – Part 3 Increase in demand and supply
4. AY2018 Market Equilibrium 2 – Part 4 Decrease in demand and supply

Homework Questions - Prepare for Presentation and Discussion

Students are required to prepare the answers to the following questions for presentation
and discussion after watching the video lectures.

1. With reference to the lecture notes, draw the following diagrams and determine the
change in equilibrium price and quantity:

(a) Demand increases and supply decreases

(i) Increase in demand more than decrease in supply;

(ii) Increase in demand less than decrease in supply; and
(iii) Increase in demand equals to decrease in supply.

(b) Supply increases and demand decreases

(i) Decrease in demand more than increase in supply;

(ii) Decrease in demand less than increase in supply; and
(iii) Decrease in demand equals to increase in supply.

2. A fungus wipes out three-quarters of the grape crop in California. At the same time, a
preliminary medical study notes that the consumption of only California raisin may
help reduce cancer risk but it was still too early to make any firm conclusion. Explain,
with an appropriate diagram, what happens to the equilibrium price and quantity of
California raisins.

1
SP School of Business 2021/2022
Student’s copy

Group Discussion Questions

Tutors will give the question to the students for student group discussion during the tutorial
session.
___________________________________________________________________________

Multiple Choice Questions

Students are required to prepare the answers to the following multiple choice questions for
presentation and discussion. Explain the rationale of the answer.

1. The most likely cause of an increase in both the equilibrium price and quantity will be
a

(A) leftward shift of the demand curve.

(B) rightward shift of the demand curve.
(C) leftward shift of the supply curve.
(D) rightward shift of the supply curve.

2. If Alice considers bean sprouts an inferior good, a decrease in her income would

(A) shift her demand curve for bean sprouts to the left resulting in a decrease in the
equilibrium price.
(B) shift her demand curve for bean sprouts to the right resulting in an increase in
the equilibrium price.
(C) cause an upward movement along the demand curve for bean sprouts resulting
in an increase in the equilibrium price.
(D) cause a downward movement along the demand curve for bean sprouts.
resulting in a decrease in the equilibrium price.

3. If demand for sugar falls greatly and, at the same time, there is a slight fall in the cost of
producing sugar, the outcome will be

(A) a decrease in both the equilibrium price and quantity of sugar.

(B) an increase in both the equilibrium price and quantity of sugar.
(C) a decrease in the equilibrium price but an increase in the equilibrium price of
sugar.
(D) an increase in the equilibrium price but a decrease in the equilibrium quantity
of sugar.

4. With the fall in the price of computer chips

(A) supply of personal computers will decrease.

(B) supply of personal computers will increase.
(C) quantity demanded of computer will increase.
(D) (B) and (C) will result.

2
SP School of Business 2021/2022
Student’s copy

5. During the Christmas season, the newspaper reported that some turkeys were
contaminated. Readers were alarmed by this report. At the same time, consumers who
suffered food poisoning reported this matter to the Ministry of Health which led to a
large number of turkeys being held back from sale. The result in the market for turkey is

(A) a decrease in equilibrium price and quantity.

(B) a decrease in equilibrium price and an increase in equilibrium quantity.
(C) a decrease in equilibrium quantity and an indeterminate change in equilibrium
price.
(D) a decrease in equilibrium price and an indeterminate change in equilibrium
quantity.

Hint: Draw at least 2 graphs on turkey to determine the answer.