Sunway University Business School
ECN1014 / Final Exam (Q) / December 2013
SUNWAY UNIVERSITY BUSINESS SCHOOL
SAMPLE FINAL EXAMINATION FOR ECN1014 INTRODUCTORY
ECONOMICS
1
Sunway University Business School
ECN1014 / Final Exam (Q) / December 2013
Section A
Answer any TWO questions.
All questions carry equal marks. This section is worth a total of 50 marks.
Question 1
[Total: 25 marks]
(a)
Distinguish between price elasticity of demand and income elasticity of demand.
[12 marks]
(b)
With the aid of diagrams and examples, discuss the ways in which the concepts
of price elasticity of demand might be of use to the managing director of an
international hypermarket chain.
[13 marks]
Question 2
[Total: 25 marks]
(a)
Giving examples and using a diagram, explain what is meant by fixed costs and
variable costs and consider their relevance in both short-run and long-run.
[13 marks]
(b)
‘It is unusual to find a large corporation that is efficient. I know about economies
of scale and all the other advantages that are supposed to come with size. But
when you get an inside look, it is easy to see how inefficient big business really
is.’ (T.B. Pickens, 1987)
(i)
What are the cost advantages a firm might gain when it increases it size?
[6 marks]
(ii)
Why might a big firm become inefficient?
Question 3
[6 marks]
[Total: 25 marks]
(a)
Discuss the similarities and differences between perfect competition and
monopolistic competition.
[12 marks]
(b)
‘In the long-run, there exists no incentive for a perfectly competitive firm to enter
or to leave the industry.’
Explain, using appropriate diagrams, the economic rationale of the above
assertion.
[13 marks]
2
Sunway University Business School
ECN1014 / Final Exam (Q) / December 2013
Section B
Answer any TWO questions.
All questions carry equal marks. This section is worth a total of 50 marks.
Question 4
[Total: 25 marks]
‘Money is not everything. But in the past governments have seemed to forget this.
Success has been measured by economic growth – GDP – alone. Delivering the best
possible quality of life for us all means more than concentrating solely on economic
growth.’ (T. Blair, 1999)
(a)
Using appropriate diagrams, distinguish between actual economic growth and
potential economic growth.
[10 marks]
(b)
To what extent an increase in a country’s GDP confirms an improvement in the
quality of life?
[15 marks]
Question 5
[Total: 25 marks]
(a)
Explain and evaluate how an expansionary fiscal policy works in theory during a
recession.
[13 marks]
(b)
Discuss four practical problems in applying discretionary fiscal policy.
[12 marks]
Question 6
[Total: 25 marks]
(a)
Outline and describe five factors which determine the international value of a
currency in a floating exchange rate system.
[15 marks]
(b)
‘Floating exchange rates automatically adjust and eventually eliminate balanceof-payments deficits or surpluses’. Illustrate and explain this statement.
[10 marks]
END OF PAPER
3