Qualification > Commerce

economics multiple choice!!

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~cornelia~:
@omega- its alright!
@lastgift- thank you soooooooo much!! u really helped!! especially the 7th question!!
but, could you plzz explain Q10 again?? i dont understand! if the tax on the good increased so the price of the good will increase thus the supply should increase because of its direct relationship with price??

lastgift:
Cornelia, you should always remember that a tax affects the supply side. It increases the cost of production for the supplier because he cannot pass the entire tax burden on consumers. If he does so by increasing the prices, the demand would fall drastically. The amount of the tax which he passes on to the consumer depends upon the elasticity of demand and supply.
For reference you can see this website : http://tutor2u.net/economics/gcse/revision_notes/demand_supply_tax_subsidies_supply_curve.htm

Do you have the AS level book by Alain Anderton? This concept is explained thoroughly there. If no, then I can scan it for you.  :)

~cornelia~:
i get it now!! thank you! :)

no, my textbook is by colin bamford and susan grant, its kinda complicated so i would really appreciate it if scanned me a better explianation!

i dont want to be a bother but could you please help me with these too?

oct/nov 2006 p1
Question 4, 5, 6, 7

lastgift:
No worries. Will upload soon! :)

For the 4th question I am not too sure but by logic only if something is in limited supply, it will have a value. If money is found everywhere, everything and anything can be afforded. I hope someone else gives you a better explanation here. :P

For the 5 the answer is C because equilibrium price level is where the market gets cleared, supply= demand. The market supply is already given, we have to find out a corresponding value of market demand which is same. The market demand is the aggregate of all individual demand, so you add up the demand of X, Y and Z. In this case 2800+2500+2900 is equal to 8200.

For Q6, a movement along the curve is due to a price factor. A shift in demand curve is due to other factors like changes in fashion & taste: http://www.bized.co.uk/virtual/vla/theories/demand_curve_movements.htm. Because it is a movement, A & D are automatically eliminated as they cause a shift.C is eliminated because a 'decrease' in demand because the demand is actually increasing. A decrease in labour cost will result in lower price and hence the movement.

For Q7, you need to quickly calculate all the parts. the calculation for part D is , I am taking the a fall in price from 9 to8 :
change in qty demanded= (650-600)/600
change in price= 1/9
PED=( 50/600) /(1/9) give 0.75 which is between 0 and 1, therefore, inelastic.

Monopoly:
Here's mine for Q4.... well there is problem with excess supply of money and that is inflation (from the quantity theory of money)... as far as I remember, over time inflation will erode away the value of money, reducing it's ability as a medium of exchange..this is what I think

on the other hand, if you consider the other options... money needs not to be durable (paper notes certainly are not), legal tender is just one form of money and money does not have a intrinsic value (forms of money like paper notes and coins have face value, i.e. its value is what is written on it).. this makes only the option regarding money supply valid

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