Economic Environment-homework assignment 

 

EXAM

 

Question 1

 

1. State the laws of demand and law supply. Illustrate and explain how equilibrium price and equilibrium quantity are determined through the interaction of demand and supply.

[40 marks]

 

1. Explain the meaning of the following concepts and their relevance to decision-making in an organisation
2. Choice and opportunity cost
3. Law of diminishing returns

• Increasing returns to scale and decreasing returns to scale

1. Negative and positive externalities

[15 marks each]

Question 2

 

1. Distinguish between a change in demand and change in quantity demanded of a named product.

[40 marks]

1. With the help of suitable diagrams, explain in each case what would happen to demand, supply and price of flats (apartments) in Bahrain if:
   1. The population of Bahrain increases.
   2. A new law place restrictions on non-residents purchasing flats.

• Property developers build more flats.

1. There is a general increase in income of Bahrain residents.
2. New land becomes available for construction of flats.
3. The Bahrain Government decides to give interest free loan to first-time buyers of new flats

[10 marks each]

 

Question 3

 

1. Using appropriate diagrams briefly explain differences between a perfect competition and a pure monopoly in relation to each of the following criteria:
2. Number of buyers and seller
3. Freedom of entry or exit into the industry

• Number and differentiation of products

1. Degree of elasticity of demand curve for firms product

[10 marks each]

 

1. Explain why a monopoly market is less efficient than a perfectly competitive market. If it is so, why do governments create monopolies by granting monopoly licenses in production and distribution?

[60 Marks]

Question 4-homework assignment 

 

Explain the economic costs and benefits that business organisations in a named industry might experience if they decide to adopt a more socially responsible position. How might such costs and benefits change over the short- and long run?

 

[100 marks]

Question 5-homework assignment 

 

Define and briefly explain the meaning of market for loanable funds using relevant demand and supply curves.

[40 marks]

 

Identify and explain factors that determine supply and demand of loanable funds in the market for loanable funds.

[60 marks]

Question 6-homework assignment 

 

1. What do you understand by the term globalisation? Briefly explain how globalisation has affected two different firms in Bahrain or countries with which you are familiar.

[60 Marks]

1. Outline and explain three benefits and three costs that could be attributed to globalisation.

[40 Marks]

 

[END]

 

Answer TWO questions

 

1. Discuss the advantages and disadvantages of privatising state enterprises. Privatisation is often followed by the establishment of regulation over the privatised enterprise: what forms may this regulation take?

 

2. Corporate governance is concerned with ensuring that an organisation is run in a responsible manner with due regard to its key stakeholders. Why has this become a prominent issue in the business world today, and what is good corporate governance in practice?

 

3. Businesses in many countries will have to cope with changes in demand patterns as older consumers become more significant in the businesses’ markets and younger people less significant. Explore, with examples and using the economic tools of supply and demand analysis, some of the opportunities and challenges associated with these changing demand patterns.  How might businesses become more informed about the changes in their markets?

 

 

4. Discuss the opportunities and challenges raised by membership of the World Trade Organisation for the businesses of an economy of your choice. Include reference to appropriate economic theory in your answer.

 

5. How will a business’s pricing strategy depend on the structure of the market in which it operates?

 

6. Why are there business cycles? Explain what (a) government, (b) the central bank, and (c) businesses should do when the economy is experiencing a recession, and why.
7.  

   Answer TWO questions-homework assignment 

   All questions carry equal marks

    

    

   You should answer TWO questions. If you do not attempt to answer a compulsory question you will receive a mark of 0 for that question.

   If you have a choice of questions and you answer more than you are asked to, your answers will be marked in the order that the questions appear on the examination question paper.  Any additional questions that you attempt will not be marked.

   You should cross out any questions which you attempt but do not wish to be marked.

   Do not open or turn over this exam paper, or start to write anything until told to by the Invigilator.  Starting to write before permitted to do so may be seen as an attempt to use Unfair Means.

    
   Question 1

    

   1. What do you understand by the term market? Illustrate and explain how equilibrium price and equilibrium quantity are determined through the interaction of demand and supply.

   [40 marks]

   1. Briefly explain the followings concepts and their relevance in business decision making:
   2. Price elasticity of demand
   3. Cross elasticity of demand
   • Law of diminishing returns
   1. Cost-based pricing.

   [15 marks each]

    

   Question 2

   1. a) With the help of relevant examples, distinguish monopolistic competition, oligopoly and monopoly from perfect competition in relation to the following criteria:
   2. Number of buyers and seller
   3. Freedom of entry or exit into the industry
   • Number and differentiation of products
   1. Degree of elasticity of demand curve for firms product

   [15 marks each]

   1. With the help of a relevant figure, explain the shape a typical long run

   average cost curve and its relevance to business decision making.

   [40 marks]

    

   Question 3

   Think about a firm that is a state-owned, regulated monopoly in Bahrain or a country you are familiar with. Suppose the government plans to privatise the firm.

   1. List and briefly discuss three possible ways the firm can be privatised

   [40 marks]

   1. Explain how the privatisation is likely to affect the firm’s objectives and business operations.

   [60 marks]

    

    

   Question 4

   Explain the economic costs and benefits that a business might experience if it decided to adopt a more socially responsible position? How might such costs and benefits change over the longer term?

   [100 marks]

    

   Question 5

   1. Explain the meaning of a fixed exchange rate system and a floating exchange rate system and name three countries that use each of the exchange rate regimes.

    

   (40 marks).

   1. Explain what would happen to the trade balance of one of the fixed exchange rate regime countries you have named in (a) above if the US dollar depreciates against other major currencies.

   (60 marks)

    

   Question 6

   1. List and explain three functions of money. What do you understand by the term liquidity in relation to the function of money

   [40 marks]

   1. Explain how the following activities of the central bank can affect the supply and demand of money in the economy:

    

   1. Open-market operations

   [20 marks]

   1. Money creation with fractional-reserve banking

   [20 marks]

   • Changing discount rate

   [20 marks]