Question 2

Points: 18

(a) Sam spends his $15 daily allowance on candy bars and bags of peanuts. The price of candy bars is $0.75 and the price of peanuts is $1.50.

(i) Construct a table showing the alternative combinations of the two

products that are available. (6 marks)

(ii) Assume peanut bag is on the vertical axis and candy bar is on horizontal

axis, compute the slope of the budget line using table derived from part

(i). (3 marks)

(iii) Compute the opportunity costs of one additional unit of candy bar and of

one additional peanut bag. (3 marks)

(b) Explain how the following factors will affect the location of Malaysia production possibilities curve (note: no need to draw diagram for your answer) :

(i) Malaysia government has imposed a no work order on people except

essential services for 6 months due to an outbreak of Corona virus.

(2 marks)

(ii) US has decided to end trade war with China. (2 marks)

(iii) Much cheaper renewal energy price. (2 marks)