ECONOMICS

c. Determine the two product numbers with the largest unit selling prices for subsequent follow-up to verify the unit selling prices.

____ 16. If two goods are ____, then an increase in the price of one leads to ____ in the quantity demanded of the

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.

In order that a market is like so there are some characteristics that the market should possess.

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.