A212 BEEB2013 MICROECONOMICS

GROUP A & B
EXERCISES: TOPIC 1

a) Give TWO (2) reasons why do you need to study microeconomics.

b) Give ONE (1) example of positive microeconomics statement and ONE (1) example of
normative microeconomics statement.

c) Explain why economist developed economic theory.

d) Briefly explain the difference between a positive statement and a normative statement.

e) What is difference between nominal price and real price.

f) The price of telephone service fell from 40 cents per minute in 2016 to 22 cents per
minute in 2019, a 45% decrease. The Consumer Price Index increased by 10% over this
period. What happened to the real price of telephone service?

g) The following table shows the average retail price of coconut milk and the Consumer
Price Index from 1990 to 2020, scaled so that the CPI = 100 in 1990.

1990 2000 2010 2020

CPI 100 158.56 208.98 218.06
Retail price of coconut milk RM1.88 RM1.99 RM2.52 RM2.88

i) Calculate the real price of coconut milk (in 1990 RM). Has the real price
increased/decreased/stayed the same from 1990 to 2010? From 1990 to 2020?

ii) What is the percentage change in the real price (1990 RM) from 1990 to 2010? From
1990 to 2020?