Econs

EIA3001

1. a) Sebuah kedai bunga menghasilkan jambangan bunga pada kos sut MC = 2 +

0.1Q. Fungsi permintaan berbalik diberi oleh P = 10 – 0.1Q, di mana P ialah ringgit

bagi setiap jambangan dan Q bilangan jambangan yang dihasilkan. Jambangan

bunga turut menghasilkan kesan luaran positif. Mereka yang melalui kedai tersebut

menerima faedah luaran sut yang diberikan oleh MEB = 2 – 0.02Q.

A florist sells bouquet of flowers at a marginal cost of MC = 2 +0.1Q. The inverse demand

function for flower bouquet is given by P = 10 – 0.1Q, where P is in ringgit per bouquet and Q

is number of bouquets produced. The flower bouquets also create a positive externality. The

passer by receive external marginal benefits given by MEB = 2 – 0.02Q.

a) Dapatkan kuantiti jambangan bunga yang dikeluarkan oleh pasaran.

Find the quantity of bouquets produced under market arrangement.

(3 markah/marks)

b) Berapakah kuantiti jambangan yang dihasilkan yang memaksimakan kebajikan

sosial?

How many bouquets should be produced to maximize the social welfare?

(3 markah/marks)

c) Untuk mencapai output yang optimal sosial, kerajaan boleh menggunakan

campurtangan berasaskan harga. Tentukan kaedah ideal yang boleh

digunakan oleh kerajaan untuk mencapai tujuan ini. Tentukan jenis polisi dan

magnitudnya.

To achieve the socially optimal output, government can use a price-based intervention.

Determine the ideal measure for government to use to achieve this goal. Specify both

the type of policy and its magnitude.

(3 markah/marks)

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EIA3001

2. a) Kes-kes berikut merupakan rentetan daripada apa yang berlaku dalam pasaran insurans dalam 2 daripada 8 pasaran di Amerika Syarikat. The following cases are the chronology of what happen in 2 of 8 insurance markets in the United States.

Kentucky 1994: GI & CR. 1996: CR modified. Reforms never fully penetrated individual market. 1998: Only two insurers remained in individual market after 40+ fled; CR repealed. 2000: GI repealed. 2004: Three-year moratorium on new state benefit mandates, other modifications to encourage insurers to return. 2012: Six insurers in the individual market.

Maine 1993: GI & CR; individual market insurers required to offer “basic” and “standard” plans. (1995: all HMOs required to offer individual market GI coverage.) 1994-2001: Individual market health insurers dropped from five to one. 2000: Premiums increased 30%-64%. 2001: Individual rates exceeded group rates by as much as 102%. 2012-2015: Rate bands expanded; subsidized high-risk reinsurance pool established.

Di mana GI (Guaranteed Issue) memerlukan penginsurans memberikan perlindungan insurans kepada semua pemohon tanpa diskriminasi. CR (Community Rating) pula melarang penginsurans daripada membezakan premium yang perlu dibayar oleh pemegang polisi.

Jelaskan apakah masalah yang dihadapi oleh pasaran insurans ini. Mengapakah masalah tersebut berlaku? Apakah kesan daripada masalah tersebut kepada pasaran insurans serta apakah langkah-langkah yang boleh diambil bagi mengatasi masalah tersebut?

Where GI (Guaranteed Issue) requires insurers to issue coverage to all applicants without any prejudice. CR (Community Rating) prohibits insurers from varying premiums that the policy holder needs to pay. Explain the problem arises in these insurance markets. Why such a problem arises? What is its impact on the insurance market and what steps can be taken to overcome the problem?

(12 markah/marks)

3/5

EIA3001

b) “Does political corruption erode civic values and foster dishonest behavior? I test this hypothesis in the context of Mexico by combining data on local government corruption and cheating on school tests. I find that, following revelations of corruption by local officials, secondary students’ cheating on cognitive tests increases significantly. The effect is large and robust and persists for over a year after malfeasance is revealed. These findings are validated by evidence from individual survey data, which documents that individual interviewed right after corruption is revealed report being less honest, less trustworthy, and more prone to thinking that cheating is necessary to succeed, compared to similar individuals interviewed just beforehand.” Ajzenman, N. (2021). The power of example: corruption spurs corruption. American Economic Journal: Applied Economics 31(2): 230-257.

i) Dengan merujuk kepada abstrak di atas, bincangkan bagaimana teori yang anda pelajari dalam Mikroekonomi III boleh diaplikasikan dalam menerangkan masalah yang dikemukakan. Referring to the abstract above, discuss how theory that you have learned in Microeconomics III can be applied to explain the presented problem.

(17 markah/marks)

ii) Katakan bahawa hukuman bagi kesalahan korupsi ialah didenda tidak kurang dari lima kali ganda nilai suapan atau RM10,000, mengikut mana-mana yang lebih tinggi. Bagaimanakah dapatan kajian ini dapat digunakan untuk mencadangkan amaun denda yang mengambilkira kerosakan yang dialami oleh masyarakat secara lebih meluas? Let say that the punishment for corruption misconduct is to be fined by not less than 5 times bribery amount or RM10,000, whichever higher. How the findings of this study can be used to suggest amount of fine that take into consideration the damage inflicted on the society?

(5 markah/marks)

3. Katakan terdapat dua firma yang bersaing di dalam pasaran. Setiap firma mempunyai fungsi kos c(x) = 10x/2 manakala fungsi permintaan diberi oleh x(p) = 100 – 0.1p. Suppose there are two firms competing in a market. Both firms have the cost function c(x) = 10x/2 while the demand function is given by x(p) = 100 – 0.1p.

a) Dapatkan kuantiti dan harga yang memaksimakan keuntungan sekiranya firma bermain permainan harga. Find the profit maximizing quantity and price if the firms are playing a pricing game.

(3 markah/marks)

b) Apakah harga yang akan dikenakan dan kuantiti yang akan dikeluarkan sekiranya strategi firma adalah kuantiti? Berapakah keuntungan setiap firma?

4/5

EIA3001 What will be the price charged and the quantity produced if the firms’ strategy is quantity? How much profit each firm make?

(14 markah/marks)

c) Katakan firma 1 menentukan terlebih dahulu kuantiti yang ingin dikeluarkan dan firma 2 akan mengikuti selepas memerhatikan x1. Dapatkan kuantiti dan harga yang memaksimakan keuntungan bagai persaingan Stackelberg ini. Suppose firm 1 decides its quantity first and firm 2 follows after observing x1. Find the profit maximizing quantity and price for this Stackelberg competition.

(14 markah/marks)

d) Sekarang katakan firma bermain permainan kuantiti berulang-ulang kali dan kedua- duanya tidak tahu bilakan permainan tersebut akan berakhir. Dapatkan faktor diskaun yang akan membolehkan kerjasama berterusan di antara firma diberi firma bermain strategi ‘grim trigger’. Now suppose that the firms are playing the quantity game repeatedly and does not now when the game will end. Find the discount factor that will ensure cooperation is sustainable given firms are playing a grim trigger strategy.

(13 markah/marks)

TAMAT END

5/5