SEMESTER JANUARY 2021 EXAMINATION

Course Code : CIB 0043

Course Name : PRINCIPLES OF ECONOMICS

Time Allowed : 3 HOURS

Maximum Marks : 100

Instructions:

1. This paper consists of three sections. Answer ALL the questions.

2. Write your answer in your own answer sheet. Use only black pen. Scan your completed
answer sheet and must be submitted via email to yus12linda@yahoo.com.

3. This examination is expected to take approximately 3 HOURS of working time. You are
advised to allocate your time accordingly. You will be given 10 minutes of reading time and
additional 15 minutes for submission process.

4. Your answer file may be submitted at any time before the due time.

4. The total marks in this examination is 100 marks. The examination is worth 60% of the
total grade in this course.

5. Please submit your file in PDF or Word format. Please name your file as follows:
Course code and ID No.

Example: DIA1113 2020.03.0010DIA

Page 1 of 9
SECTION A - Answer all questions in the answer booklet given. (30 MARKS)

1. Economics is the study of

A. how society manages its unlimited resources.
B. how to reduce our wants until we are satisfied.
C. how society manages its limited resources.
D. how to fully satisfy our limited wants.

2. The concept of opportunity cost is based on the principle of :

A. Consumption
B. Production
C. Profit
D. Scarcity

3. When production possibilities curve (PPC) is a straight line…

A. opportunity cost is increasing
B. opportunity cost is constant
C. opportunity cost is decreasing
D. resources are not scarce

4. Refer to the following:

Which of the points on the PPC in the diagram is currently unattainable given the
economy's resources?
A. Point A
B. Point C
C. Point D
D. Point E

5. Which of the following will NOT lead to an outward shift of the PPC?
A. Upgrading the quality of human resources
B. An increase in the number of labour.
C. An improvement of technology
D. Decrease in the number of labour

6. Name the four factors of production.

A. Land, labor, capital goods, enterprise
B. Government, land, labor, capitalism
C. Enterprise, socialism, labor, land
D. Communism, capital goods, land, labor

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7. The following graph shows the production of cakes and pizzas for Alex.

Cakes

M N

S P

Pizza

Which point represents Alex’s maximum production of cakes?

A. M
B. N
C. S
D. P

8. The law of demand implies that demand curve…

A. slopes down
B. slopes up
C. is horizontal
D. shift rightwards whenever the price rises

9. Complement is a good…
A. of lower quality than another good
B. used together with another good
C. used instead of a another good
D. of higher quality than another good.

10. Which of the following pairs is a substitute?

A. Bread and butter
B. Tea and sugar
C. Mobile phone and charger
D. Coffee and tea

11. A movement along the demand curve is called ______

A. a change in demand
B. a surplus
C. a change in quantity demand
D. a shortage

12. If a product is in shortage, we can conclude that its price …

A. is below the equilibrium level
B. is above equilibrium level
C. will fall in the near future
D. is in equilibrium

Page 3 of 9
Use the following graph to answer questions 13-16:

The market for Chocolate Pudding in Tafe College

Price D1

Do
5 S
4
3
2
1

25 50 75 100 125 150 175

Quantity

13. On the graph above, the initial equilibrium price and quantity are :
A. P=RM2.00 ; Q=75
B. P=RM2.00 ; Q=150
C. P=RM3.00 ; Q=100
D. P=RM4.00 ; Q=75

14. Which of the following would cause the demand (D0) for chocolate pudding to shift to the
right (D1)among college students?
A. An increase in financial aid to college student
B. Half-prize chocolate pudding for anybody with a college ID
C. An increase in the price of a complement, milk
D. A decrease in a price of a substitute, ice-cream

15. After an increase in demand, the new equilibrium price and quantity are:
A. P=RM2.00 ; Q=75
B. P=RM2.00 ; Q=150
C. P=RM3.00 ; Q=100
D. P=RM4.00 ; Q=150

16. Suppose that medical research find evidence that chocolate pudding increases risk of
diabetics. We would expect to see:
A. No change in the demand for chocolate pudding
B. A decrease in the demand for chocolate pudding
C. A decrease in the supply for chocolate pudding
D. A decrease in a quantity demand for chocolate pudding

17. Of the following, which is NOT considered to be a fixed input?

A. Factory buildings
B. Offices
C. Raw material
D. Rental

Page 4 of 9
18. A fixed input …
A. can not be change in the long run
B. can not be changed in the short run
C. can be changed in the short run
D. is fixed for one year

19. Given that Total cost (TC) is RM140 and the quantity is 7 units, what is the Average
Total Cost (ATC) ?
A. RM20
B. RM10
C. RM35
D. RM70

20. When the Average Cost (AC) is equal to Marginal Cost (MC)…
A. The AC is at its maximum
B. The MC is at its maximum
C. The AC is at its minimum
D. The MC is at its minimum

Answer Question 21 and 22 are based on the following table:

Labour Output Variable Total Cost

Cost (RM) (RM)
0 0 0 30
1 2 20 50
2 7 70

21. The total fixed cost is __________.

A. RM20
B. RM30
C. RM50
D. RM70

22. The variable cost at two units of labor is _____.

A. RM40
B. RM50
C. RM60
D. RM70

23. The price of one country’s currency in terms of another’s country’s currency is called.
A. Inflation rate
B. Exchange rate
C. Term of trade
D. Currency valuation

Page 5 of 9
24. Which agency is responsible in economic development plan?
A. Inland Revenue Board
B. Ministry of Education
C. Bank Negara
D. Economic Planning Unit

25. The central bank of Malaysia is ...

A. Public Bank
B. Malayan Banking
C. Maybank
D. Bank Negara

26. Which of the following is a function of money?

A. A medium of exchange
B. A measure of value
C. A store of value
D. All of the above

27. Which of the following is the local commercial bank that available in Malaysia?
A. Standard Chartered Bank
B. Maybank
C. Citi Bank
D. Hong Kong Bank

28. A tariff is …
A. a tax on local goods
B. a tax on imported goods
C. an interest charges on investment
D. an indirect tax

29. Which of the following is NOT a tool for protectionism policy?

A. Embargo
B. Tariff
C. Quotas
D. Subsidies

30. ______ is a situation where a country exports more than its imports.
A. A trade surplus
B. A budget surplus
C. An expansion
D. A deficit

Page 6 of 9
SECTION B – Answer ALL questions. (30 MARKS)

1. The diagram below shows the Production Possibility Curve (PPC) for guns and butter.

Gun

Butter

Identify the points which represent:

i) Choices (2 marks)
ii) Inefficiency (2 marks)
iii) Unattainable (1 marks)

2. Sketch the diagram that illustrate :

(a) Law of demand (2.5
marks)
(b) Law of supply (2.5
marks)

3. Explain any TWO (2) factors that influence the demand. (5 marks)

4. Explain the law of diminishing marginal return. (5 marks)

5. Explain any TWO (2) ways of protecting home industries against foreign competition.
(5 marks)

6. Differentiate between central bank and commercial bank. (5 marks)

Page 7 of 9
SECTION C –Answer ALL question. (40 MARKS)

QUESTION 1

Production Possibility Table

Point Cars Radio
A 0 70
B 1 65
C 2 55
D 3 30
E 4 0
Required:
a) Define Production Possibility Curve (PPC). (4 marks)
b) Based on the table above, draw the Production Possibility Curve (4 marks)
c) Illustrate and explain the effect of the following
(i) Production of 60 units of radio and 2 units of cars. (3 marks)
(ii) Production of 50 units of radio and 2 units of cars. (3 marks)
d) What is the opportunity cost of car when moving from point A to B? (2 marks)
e) What is the opportunity cost of car when moving from point D to E? (2 marks)
f) How will an increase of resources affect the Production Possibility Curve? (2 marks)

QUESTION 2

BBS Technologies Ltd faces the following cost schedule.

Fixed Variable Total Marginal Average Average Average
cost cost cost cost Fixed cost variable cost total cost
Units (FC) (VC) (TC) (MC) (AFC) (AVC) (ATC)
RM RM RM RM RM RM RM

0 46 0
1 46 30
2 46 50
3 46 58
4 46 64
5 46 70
6 46 80
7 46 94
8 46 114
9 46 144

Required:
(a) Fill in the table with correct answers. (16 marks)
(b) What is the relationship between MC with ATC and AVC? (4 marks)

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End of document

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