This set practises five skills: reading features from evidence, explaining competitive pressure, separating differentiation from monopoly, describing pricing limits, and using neutral wording. The questions run from easier to harder. Every case is fictional.
Write your answer before you open the working. Quote the evidence each time.
Questions
1. Features from evidence. A case says: “Eighty vendors sell nearly identical bags of rice at the Pasar Seri market. Anyone with a licence of RM40 a year can set up a stall.” Name the features the evidence points to.
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Number of sellers: eighty, so many. Product: nearly identical. Entry: a licence of RM40 a year is a low cost, so entry is easy. The evidence suggests many sellers of a similar product with easy entry, so one vendor is likely to have little control over price.
2. Calculating changes. Mee Sedap sells 200 bowls of noodles a day at RM6.00. It raises the price to RM6.60 and sells 170 bowls. Calculate the percentage change in price and in sales, and the change in daily revenue.
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Price: 0.60 ÷ 6.00 = 10% rise. Sales: 30 ÷ 200 = 15% fall. Revenue before: 200 × RM6.00 = RM1,200. After: 170 × RM6.60 = RM1,122. Revenue fell by RM78. Sales fell by a bigger percentage than price rose, so buyers are sensitive to price.
3. Competitive pressure. Roti Jala sells 80 packs a day at RM5. A rival opens nearby selling similar packs at RM4. Roti Jala’s sales fall to 60 at RM5. Calculate the fall in daily revenue and write a short chain of explanation.
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Before: 80 × RM5 = RM400. After: 60 × RM5 = RM300. Fall: RM100. Chain: a close rival sells a similar product for RM1 less (pressure), so buyers switch and sales fall from 80 to 60 (effect on sales), which cuts revenue by RM100 a day (effect on revenue). Roti Jala may respond by lowering its price.
4. Response to pressure. Continuing question 3, Roti Jala cuts its price to RM4.50 and sells 75 packs. Is its revenue higher or lower than at RM5 with 60 packs? Is it back to the original?
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At RM4.50: 75 × RM4.50 = RM337.50. That is RM37.50 more than RM300, but still RM62.50 below the original RM400. The price cut recovered some revenue without restoring it.
5. Differentiation or monopoly? Harum Soap has a rose scent no other brand uses. Twenty other brands of soap are sold in the same shops. Is Harum Soap a monopoly? Use the switching test.
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No. The scent is a form of product differentiation, but if Harum Soap raised its price, buyers could switch to any of twenty other soaps that meet the same need. Close substitutes exist, so it is not the only seller.
6. Monopoly evidence. A fictional island has one bridge operator, Jambatan Timur, which holds the only licence for the crossing. The next nearest crossing is a three-hour detour. Which features suggest a monopoly, and what limits could still apply?
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Features: one seller, a licence blocking entry, and no close substitute (a three-hour detour is a poor alternative). Possible limits: drivers may cross less often or take the detour if the toll rises, and any rules attached to the licence may limit the toll.
7. Market share. Five firms sell tea in a fictional town. Monthly sales: Firm A 300 cartons, B 250, C 200, D 150, E 100. Calculate Firm A’s market share. Is Firm A a monopoly?
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Total = 300 + 250 + 200 + 150 + 100 = 1,000. Share = 300 ÷ 1,000 = 30%. Firm A is the largest seller but not a monopoly, because four other firms share 70% of sales.
8. Pricing constraint. Panggung Lumba is the only cinema in a fictional town. At RM15 a ticket it sells 800 tickets a week. At RM18 it sells 640. Calculate revenue at each price and describe a possible pricing constraint.
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At RM15: 800 × RM15 = RM12,000. At RM18: 640 × RM18 = RM11,520. Revenue falls by RM480. Price rose 20% (3 ÷ 15) and tickets fell 20% (160 ÷ 800). A possible constraint is buyer response: viewers may go less often or watch at home, so even the only cinema may not gain from a higher price.
9. Neutral wording. Rewrite in neutral economics wording: “The shameful supplier robs households.”
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For example: “The supplier is the only source of the service, so households may have no close alternative. If it raises its price, households may buy less or pay more, and the effect depends on how sensitive their demand is.” The labels are replaced by a feature, an effect and a condition.
10. Full case. Read: “Bunga Tropika is one of 15 florists in Bandar Utama. Each makes its own bouquet style, and customers say they have a favourite. A shop licence costs RM300 a year. Bunga Tropika raised its bouquet price from RM40 to RM44 and sales fell from 100 to 85 a week.” (a) Identify three features. (b) Calculate weekly revenue at each price. (c) Describe a pricing constraint.
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(a) Many sellers (15), product differentiation (own styles, favourites), easy entry (licence RM300 a year). (b) Before: 100 × RM40 = RM4,000. After: 85 × RM44 = RM3,740. Revenue fell by RM260. (c) Rivals selling similar bouquets limit the price: a 10% rise lowered sales by 15%, so buyers switched, and revenue fell.
If you got these wrong
| What went wrong | Go back to |
|---|---|
| Missed or ignored a feature, or called a large firm a monopoly (1, 7) | Identify structural features from supplied evidence |
| Stated the pressure but no effect, or percentage and revenue slips (2, 3, 4) | Explain a competitive pressure on a fictional firm |
| Confused a distinctive brand with a sole seller (5, 6) | Distinguish product differentiation from monopoly |
| Said a sole seller can charge anything, or no constraint named (8, 10) | Describe a possible pricing constraint |
| Used loaded words in place of evidence (9) | Avoid applying a political evaluative label to real institutions |
Use the percentage-base explorer to recheck percentage changes and the ratio interpretation tool for shares. Log each slip in the mistake log and retest queue. The topic overview is in the market structures route.
If the same kind of error comes back after revision, our teachers can work on it in online one-to-one Economics tuition.