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Task 1
In Malaysia, there are several main petroleum companies that produce petrol
and diesel and they are compete with each other such as PETRONAS, PETRON,
Shell, BH Petrol, and Caltex (teckqing, 2013). They are also known as oligopolistic
firms (teckqing, 2013). Besides, oil and gas are defined as consumers goods such as
consumers use fuels for their vehicle and use gas when cooking. Thus, oil and gas are
commonly used by consumers in daily life.

Demand and supply is one of the important concept in economic. As we all
know petroleum is one of the necessary goods in our daily life as petrol for vehicles.
Thus, the demand of petrol is always increase, but the supply is become lesser. This is
because the petroleum is considered as non-renewable resources and maybe will
running out in coming decades. In addition, the demand of petrol is relatively
inelastic because petrol does not have close substitutes. Thus, all petroleum
companies have to spend a huge amount of money to find other resources to replace
petrol due to the scarcity of petrol.

Besides, petrol is the complementary goods to vehicle. The price of vehicles
increase will result the demand of petrol increase. For instance, Proton has launches a
monthly promotion and rebate for selected cars (Protonprice, 2014). As a result, this
promotion attracts people to purchase their own vehicles with a lower price. Thus, the
quantity of vehicles increase will cause the demand of petrol also increase. On the
other hand, the price of petrol increase but the demands of petrol remains unchanged
even the government raise the price of petrol, the consumers still consume the petrol
on schedule. So, petrol is facing an inelastic demand. An inelastic demand means that
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the price change of petrol will not have a big impact on the consumers quantity
demanded. This is because there is no substitute for petrol, so this makes the petrol
becomes a necessary product for consumers. Unfortunately, majority vehicles need
petrol or diesel to run it, therefore petrol and diesel becomes an inelastic product in
todays modern world. Hence, the quantity demanded will not reduce as the price of
petrol or diesel increase. The diagram 1 below are present the inelastic demand of
petrol and diesel by consumers.

Price





Demand
0 Quantity

Furthermore, all petroleum companies do not concluded together which means
that they do not team up and make any changes on the price of petrol which they want
to sell. This is because the Malaysias government has interferes by introduce
subsides, price ceiling and price floor to prevent the present of shortage or surplus.
Price ceiling has prevented all petroleum companies do not have flexibility to set the
price higher than certain price has been set while price floor has prevented all
petroleum companies do not have flexibility to set the price below the price set. This
is to protect the consumers benefits and prevent excessive demand which will cause
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shortage or surplus. The diagram 2 shows the effect of price ceiling and price floor
(teckqing, 2013).

Price Supply
Surplus
Price floor P
1
Q
s
> Q
d


P
2

Shortage
Price ceiling P
3
Q
s
> Q
d
Demand
0 Q
1
Q
2
Q
3
Quantity

Apart from that, subsidies from government help consumers to have an
affordable price to enjoy the cheaper petrol. For example, the actual price of RON95
petrol is RM2.73 and the price of RON95 per litre sell is RM2.10. This means that the
government has subsidized RM0.63 for RON95 petrol (Lee, 2013). Although the
price of petrol has been set, all petroleum companies still make a profit whereby
marginal cost is equivalent to marginal revenue due to the government have
subsidizing RM0.63 to them. As a result, more consumers are willing to purchase it,
thus, the quantity demand will increase as the price has subsidized by the government.
The diagram 3 show the change in quantity demanded when there is subsidy.




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Price
S
1
S
2


P
1

P
2


D
1

0 Q
1
Q
2
Quantity

Moreover, all petroleum companies earn supernormal profits in the long run
production. When the average revenue earned by the company is greater than the
average total cost of producing goods is known as supernormal profits. The present of
high barrier to entry is to prevent other petroleum companies to enter into the field
which means that all petroleum companies will continue earning the supernormal
profits.

As a conclusion, all petroleum companies are run an oligopoly market
structure in Malaysia (teckqing, 2013). They are competing with each other by selling
petrol and diesel to consumers (teckqing, 2013). Although they are oligopoly market
structure but they do not set their price of petrol and diesel due to the price is set by
the government (teckqing, 2013). Government has set price floor and price ceiling in
order to control the price of petrol and diesel and protect the consumers (teckqing,
2013). This is to meet the equilibrium price to avoid the shortage or surplus of petrol
and diesel (teckqing, 2013). Thus, all petroleum companies will continue to earn
supernormal profits as fuels are necessary for all Malaysian with vehicles.
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Task 2
As a student, I am so glad to have this opportunity to conduct and experience
the real life business myself. This project is known as Fresh Mart. The objective of
this project is to give explanation of the project by using the microeconomics theory.
Throughout this project, we are able to learn the practical experience which including
the overall operating business flow and how to use the microeconomics theory or
concept to analysis the Fresh Mart project.

First of all, I did learn that demand and supply, the law of demand and supply,
market equilibrium, and price elasticity in Microeconomics concept to determine the
Fresh Mart project. Firstly, the demand of fruits and vegetables has shift to the right
during the peak hours which is at 12pm to 2.30pm. This is because there are a lot of
potential customers pass through our stall as they want to consume the fruits before or
after having their lunch. Thus, the demand of fruits and vegetables has increase.
Therefore, the demand shift to the right more than supply and the equilibrium prices
rises. In addition, the law of demand and supply has occurs. Law of demand mean
that the higher the price, the lower the quantity demanded. So, the price and quantity
have a negative relationship in law of demand while there is a positive relationship
between the price and the quantity is mean law of supply. Hence, I understand that if
we set ours price of fruits and vegetables too high, surplus will occur. In contrast, if
we set ours price of fruits and vegetables too low, shortage will occur. Therefore, we
have to find a best decision to sell our products.


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Apart from that, market equilibrium has meets as we set ours price
reasonably. For example, we have reduced the price of fruits and vegetables after the
peak period. This is because we need to clear our products as soon as possible and
this also to attract customers. This strategic is effective and the quantity demand has
increase. Moreover, price elasticity also one of the concepts I did learnt. Price
elasticity is responsiveness of the quantity demanded to a change in price. The
quantity demand is elastic when the price is reduced. For instance, we reduce ours
price after peak hours, this cause the products have been clear faster and the revenue
rises. Hence, the demanded is elastic.

On the other hand, I notice that thinking and problem solving skills is very
important which determine the project either success or failure. This is because
uncertainty issue may occur any time. So, it is important to me to have a right skill to
resolve these problems and how I handle the challenges and pressure. Besides, a
communication skill is very important skill to have in any place. This is because it
will improve the relationship among the group members and increase the accuracy of
the message when we are passing the latest information to the group members.
Sometimes, there are some member do not understand the task during the Fresh Mart
discussion, others members are willing stand out explain the information again to
help them understand the task in depth. Thus, communication skills are always
important no matter what situation you are in because making a mistake from a bad
communication skill. Hence, this skill is important to me now and the future and it
will improve a better relationship with my workplace peers

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Last but not least, X-Space collaborative classroom has impacted upon my
learning experience as compared to a normal classroom. The idea of the arrangement
of tables in the X-Space collaborative classroom is to promote the formation of small
groups to allow and encourages students to have a discussion within the group at each
table. Besides, tutors and students can show our answers and solutions through the
white board that allows every student to display and view all solutions. This has made
me have better understanding of this module. Furthermore, this also allows us to
communicate with each other effectively. This has established a good relationship
between my classmate and my tutors. Therefore, X-Space collaborative classroom has
impacted my learning experience and has changed my learning style.

In conclusion, these experiences and knowledge will help me to build up
myself now and in the future. Overall, this module had helped me a lot in my study
and real-life.


E-port Folio Link: https://sites.google.com/site/ecn60104/








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References
Lee, Y.M. (2013) RON95 petrol, diesel up 20 sen from midnight (Update). The Star
Online [online]. 2 September. Available from:
http://www.thestar.com.my/News/Nation/2013/09/02/ron95-up-20-sen.aspx/
[Accessed 5 Jun 2014].

Protonprice (2014) Proton Price Promotion Malaysia. Available from:
http://protonprice.com/ [Accessed 5 Jun 2014].

teckqing. (2013) Microeconomics individual assignment. Microeconomics blog
[blog]. 9 June. Available from:
http://lawrenceeconomics.blogspot.com/2013/06/microeconomics-individual-
assignment.html [Accessed 5 Jun 2014].