GROUP: SAMA4A (20254)
INDIVIDUAL ASSIGNMENT 1 (MICROECONOMICS)
a) List any four (4) controlled items listed in the festive price control scheme as stated in the
article above.
Four (4) controlled items listed in the festive price control scheme are:
1. Imported buffalo meat
2. Mackerel
3. Mustard greens
4. Red chillies
b) Based on the article above, identify the type of price control scheme used during festive
season such as Hari Raya. Briefly explain two (2) purposes of implementing such a price
control scheme.
The type of price control scheme used is a Maximum Price Control Scheme (price
ceiling). Under this scheme, the government sets a maximum legal price that sellers are
not allowed to exceed, especially during festive seasons.
One purpose of this scheme is to prevent price exploitation by sellers. During festive
seasons such as Hari Raya, the demand for essential goods increases. Without price
control, sellers may raise prices excessively to maximise profit. The price ceiling helps to
prevent traders from charging unfairly high prices. Another purpose is to ensure the
affordability of essential goods for consumers. The scheme ensures that basic necessities
remain affordable so that all consumers, particularly low- and middle-income households,
are able to purchase essential goods during festive periods.
c) In paragraph two, it is stated that "At the ministry, we have 2,400 officers nationwide,
supported by nearly 900 price monitors. We also receive a significant amount of information
from the public, who report on the situation,”. Briefly discuss the disadvantages of
implementing such price control scheme related to the sentence quoted above.
One disadvantage of implementing a price control scheme is the high enforcement cost.
As stated in the article, the government requires a large number of officers and price
monitors nationwide to monitor prices and handle public complaints. This increases
administrative and enforcement costs for the government. Another disadvantage is the
possibility of shortages. When prices are fixed below the market equilibrium, suppliers
may reduce production due to lower profits. As a result, the quantity supplied decreases
while demand remains high, leading to shortages of controlled goods in the market.
d) Using an appropriate diagram, illustrate how the price control scheme stated in the article
works.
The diagram illustrates how the price control scheme works, setting a maximum price (P₂)
below the market equilibrium price (P₁) to make goods more affordable. During the festive
season, supply decreases to Sf, leading to a higher equilibrium price (P fest) and lower
equilibrium quantity (Q₂). The price ceiling P₂ creates a shortage as the quantity demanded
(Qd) exceeds the quantity supplied (Q₂).
INDIVIDUAL ASSIGNMENT 2 (MACROECONOMICS)
a) In paragraph 2, it is stated that “The urban jobless rate for 16-to-24-year-olds, excluding
students…”. Briefly explain the reasons for excluding students from the calculation of
unemployment rate.
Students are excluded from the unemployment rate because:
1. Students are not part of the active labour force
They are primarily engaged in education and are not actively seeking full-time
employment.
2. They are not available for immediate work.
Most students are studying full-time and therefore cannot accept a job even if one
is offered.
3. Including students would distort the true unemployment figure.
It would overstate unemployment because students are voluntarily not working,
not because they cannot find jobs.
b) In paragraph 4, the article mentioned that “The jobless rate does not account for job
seekers who have given up on finding work….” State the economic term suitable to
elaborate this group of unemployed people above.
The suitable economic term is discouraged workers. These are individuals who are
willing and able to work but have stopped actively seeking employment because they
believe that no suitable jobs are available for them. As they are not actively looking for
work, discouraged workers are not included in the labour force and are excluded from the
official unemployment rate.
c) Briefly discuss how monetary policy could be used to control unemployment problems.
Using China’s economic situation as an example, elaborate your points.
Monetary policy alone is insufficient to address unemployment in China for several
reasons:
1. Youth unemployment is largely structural in nature, caused by a mismatch
between graduates’ skills and labour market requirements, which monetary policy
cannot directly resolve.
2. Lower interest rates may not encourage firms to hire new workers if business
confidence and demand remain weak.
3. Changes in labour market structure and statistical methods suggest that
unemployment is not purely a demand-side problem.
4. Monetary policy is more effective in the short run, while youth unemployment
requires long-term structural solutions, such as skills training and education
reform.
5. Young job seekers need active labour market policies, including wage subsidies,
internships, and vocational training.
Therefore, a combination of monetary, fiscal, and structural policies is necessary to
effectively reduce unemployment.
d) Identify and explain the type of unemployment mentioned in the article above. Explain
another type of unemployment by using suitable examples.
Type of unemployment in the article is Structural Unemployment. Structural
unemployment occurs when workers’ skills do not match the skills required by
employers. In China’s case, many young graduates are unable to find jobs because their
qualifications do not align with current market needs. Another type of unemployment are
Cyclical Unemployment. Cyclical unemployment arises due to economic downturns. For
example, during a recession, firms reduce production and lay off workers because of a
decline in aggregate demand.