Economics Exercise Topic 1.0 1. What is the definition of Economics?

2. What is the meaning of scarce resource? Provide 3 examples of scarce resource (other than time & money).

3. Why is the management of scarce resource important?

4. Identify and explain the 2 types of economics. Can you give one example for each type of economics?

5. What are the 2 methods of studying economics? What does each method involve?

6. What is an opportunity cost?

7. For each of the following situations, describe the potential opportunity cost(s): Studying for your economic test Not enough sleep before the day of the test

Driving to Sunway Pyramid to buy a Wii Console and games Having serious traffic jam when going back home

Buying a new car instead of taking the bus to work/study Extra charge for the car petrol every month

A company spending an extra $10 million dollar for research It can import more stock of the old products and make $20 million

Asking girl/guy A out for a date. Not well prepared for Economics test

8. Draw a Production Possibility Frontier (PPF) graph with the Y-axis for product A, and Xaxis for Product B. Designate 2 points (C & D) on the curve. a. What are the different quantities of product A and B produced at point C and D? What principle does point C and D illustrate? b. Please designate a point (E) to show resources being used inefficiently. Give 2 examples how this inefficiency can occur. c. Designate one more point (F) outside of the curve. What does this mean? How can a firms PPF grow to that point? Give 2 examples. d. Draw a new PPF graph for a growing firm (over the years).

9. One of the economic principles states that People respond to incentives. Explain this principle and provide a relevant example.

10.Explain what a free market (or capitalistic economy) means? Planned economy? What about a mixed economy?

Economics Exercise Topic 3.0 1. Explain the law of supply.

2. The supply equation for soy sauce of business A is expressed as Qs (in bottles per week) = 13000 + 7000 (p). For business B, the equation is Qs = 12000 + 7500 (p) and business C, Qs = 15000 + 9000 (p). Prepare a table to show how Qs changes (for individual business and in total) as prices rise from $2 to $3 to $4 to $5. Then draw the market supply curve for this product.

3. Explain the difference between an individual and a market supply curve.

4. Why are firms motivated to produce/supply more of the product when prices are higher?

5. What effect will each of the following factors have on the supply of hamburgers (show it on a graph): a) The cost of meat patty has increased. b) The selling price of kebab has gone up higher than hamburgers. c) Due to better technology, the machines can now produced more burgers per hour. d) Due to a recent recession, many hamburger joints have gone belly up. e) The government has levied an extra sales tax of 15% on every burger sold.

6. What causes the movement along the supply curve? What causes a shift in the supply curve?

7. What happens to the supply curve of Proton cars if the manufacturer is given a subsidy of $10000 for every car produced? Why?

8. If fruit sellers expect the price of apples to increase in the following week, what would happen to the supply curve of apples now? Why?

9. Business A, a toy manufacturer, currently produces 2 different toys i.e. Transformers action figures and Sesame Street soft toys. What would happen to the supply curve of Transformers action figures if there is a decrease in the selling price in Sesame Street soft toys? Why?