Economics 247 Assignment 1 Version A This assignment has a maximum total of 100 marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 1 through 5. Answer each question clearly and concisely. 1. a. 3/3Define opportunity cost, and explain its importance in economics. (3 marks) -The opportunity cost of something is what you must give up of one thing, in order to get it. Opportunity cost is a key concept of economics because it is described as expressing the basic relationship between scarcity and choice. Opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently. b. 4/4The province of British Columbia hosted the …show more content…
If the minimum wage is above the equilibrium level, the quantity of labour supplied exceeds the quantity demanded. The result is unemployment. The minimum wage then raises the income of those workers who have jobs, but it lowers the incomes of those workers that cannot find jobs. Workers with high skills and much experience are not affected, because their equilibrium wages are well above the minimum. An example of a price ceiling is rent control. The goal of this policy is to help the poor by making housing more affordable.1/ 2 Often this is done in an attempt to increase equity 5. The following table shows the quantities of ice cream cones that will be demanded and supplied at various prices. Price Quantity of Ice Cream Demanded/Month Quantity of Ice Cream Supplied/Month $5 6,000 10,000 $4 8,000 8,000 $3 10,000 6,000 $2 12,000 4,000 $1 14,000 2,000 a. What is the equilibrium price and equilibrium quantity? (1 mark) 1/1 The equilibrium price is $4.00 and the equilibrium quantity is 8,000. b. Suppose the price for the ice cream is currently $5. Will this price result in a shortage or a surplus? How much is the shortage or surplus? What would you expect to happen to price? (2 marks) 2/2 This will result in a surplus of 4,000 ice creams, and you could expect the price to go down in order to sell the surplus. c. Suppose the price is currently $2. Will this price result in a shortage or a surplus? How much is the shortage or
c. Determine the two product numbers with the largest unit selling prices for subsequent follow-up to verify the unit selling prices.
b. Which would there be—excess demand or excess supply—at a price of $8.00? How much? What about at a price of $10.00?
3. As the price of a good increases, the change in the quantity demanded can be shown by
A market failure is when there are not enough resources that are inefficiently allocated due to imperfections in the market mechanism. When a resource is inefficient it means the resources are not used in the best distribution by firms or organizations. An ETS is executed when the environment has been polluted and the government intervenes in order to control the pollution by providing economic encouragements towards the firms and organizations to reduce the amount of pollution emitted in the environment (Brown* 2001). When ETS is implemented it reduces the pollution of the environment caused by different firms thus making it its main goal. The type of market failure the ETS is addressing is the negative externalities.
C) If Maria spends a smaller proportion of her income on clothing her quantity demanded will be lower. Her demand curve shifts to the left because she will spend a constant fraction of her income on clothing, and the new proportion spent on clothing is less than the earlier proportion of income spent.
Indicate whether each of the following changes in price cause total revenue to increase, decrease or remain unchanged? Explain why. (2 marks each)
The fundamental economic problem is related to the issue of scarcity. Scarcity means that resources are limited and short in supply in the world (e.g. diamond). Because of limited resources and unlimited demands, society needs to decide how much to produce and distribute these relatively scarce resources. The basic economic problem can be define as what to produce, how much to produce and for whom to produce.
1. Total cost is the figure that describes the total cost of production for an organisation. It is made up of both fixed costs, which are costs that are fixed in relation to output, and variable costs, which are costs that vary depending on the level of output. Before production commences, the total costs of the organisation will be the same as the fixed costs, as no raw materials or labour have been utilised. Although when production increases, variable costs will also rise, meaning the total costs will increase. This can be shown by the diagram below:
Externalities are common in virtually every area of economic activity. They are defined as third party (or spill-over) effects arising from the production and/or consumption of goods and services for which no appropriate compensation is paid.
32. A decrease in quantity supplied is shown as a movement from? point B to point A
The result was an increase in inventories and severe cutbacks in production at a number of electronics, automobile, and textile manufacturers, as well as at the smaller firms that supplied the parts. Factory automation systems were introduced to reduce dependence on labor, to boost productivity with a much smaller work force, and to improve competitiveness. It was estimated that over two-thirds of South Korea's manufacturers spent over half of the funds available for facility investments on automation.
Before the shift, the market was in equilibrium at price 4,25 $ and quantity demanded and supplied Q3. Since there’s excess demand now, suppliers have to increase the price to 6,50 $ and demand decreases to Q4. If not, there will be empty groceries, queues and black markets can arise where products are
xii. This move of increasing the price makes the customers in a tight spot especially those who are in a life-or-death situation.