IGCSE/GCSE/O & A Level/IB/University Student Forum
Qualification => Subject Doubts => GCE AS & A2 Level => Commerce => Topic started by: ~cornelia~ on October 26, 2011, 07:24:21 pm
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can some one explain to me these questions?
AS level economics paper 1 may/june 2006
question 1,7,10,11,12
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Hi Cornelia!
The answer to Q1 is D because if interest rates rise, the the returns on saving in a bank is going to be higher which requires the consumer to now choose between saving or spending, thus the OC rises.
The answer to 7 is B because the elasticity of demand is unitary, the condition is that the total revenue of the firm should remain $ 48000 (qty*price= 12*4000). We have to know find out the price which when multiplied with 20000 would give us 48000. So, 48000/20000= $ 2.4
The answer to 10 is B because a rise in tax would shift the supply curve to the left---> form S1 to S2 and a fall in income would decrease demand, again a leftward shift---> D1 to D2.
The answer to 11 is C. The wine has a perfectly inelastic demand, no matter what, it is going to be bought and a rise in price would mean more expenditure. Demand and sales would never fall if the PED is 0. A is false because the price would rise by the amount of tariff as the wine producers can safely pass on the burden of the tariff to the consumers as the increase in price wouldnt affect the demand.
In Q12, the original consumer surplus is WPQ, after the shift it is WTV. The difference between these two rectangles is the triangle of PQVT.
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The partnership act is only taken into account if the partners do not have a written Partnership Agreement.
The not signed agreement is usually called as the limited partnership too, because there is no agreement signed between the partners.
Here's an example:
If there are 2 companies and they're fighting over the profit sharing, without no partnership agreement signed then the profit would be divided equally as to the partnership agreement.
This is the rule followed everywhere now.
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Omega I thnk you got the wrong topic. :)
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I think I did a mistake. I'm really sorry for it. Sorry for the confusion though.
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@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??
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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. :)
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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
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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.
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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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@lastgift- merci and arigato!! (thank u)
u have been a great help! :D
i bet ur tired of my question but i have two more :P
may/june 2007 p1
ques 7 and 9?
@monoploy-
thank you for your help,
could u ,more clearly, plz explain what legal tender is?
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Cornelia, thanks for making me revise Economics :D
- The interest elasticity of demand of loans is like any other elasticity.
Formula= %age change in qty demanded/ %age change in interest
Change in qty demanded of loans is (4000-5000)/5000= -0.2
Change in interest= (10-8)/8= 0.25
Therefore, elasticity= -0.2/0.25= -0.8 which is option C.
I tried 9th, it came out to be wrong. Maybe Monopoly can again share the work load :P
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legal tender: it is defined as the form of money that must be accepted in settlement of debt by law. It consists of all notes and coins.
another form is the near money which consists of financial assets. Mainly near money are used as a store of value rather than medium of exchange.
Q9) I'll just do the calculation for 1200cc as it is same for 2000cc
now XED = %change in D of car/%change in P of petrol
since the XED is negative, A and B are invalid (a rise in petrol price will cause a fall in demand and hence sales of car)
now %change in D of car = [(10000 - x)/10000] * 100 where x is the new number of car sold/demanded after rise in price of petrol
XED = 0.25 (ignoring the -ve sign as it)
[(10000 - x)/100]/100 = 0.25
solve for x = 7500
decrease in car demand = 10000-7500 = 2500
calculate urself and you will find also a decrease of 2500 for 2000cc cars
hence total fall in demand is 5000
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thanks a lot both of you!!
lastgift, ur welcome :P
dont worry i will be here all year making you revise! :P
are you doing AS level econ??
monopoly and lastgift,
can you do two more questions from the same year?
ques 4 and 11
thank you :D
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thanks a lot both of you!!
lastgift, ur welcome :P
dont worry i will be here all year making you revise! :P
are you doing AS level econ??
monopoly and lastgift,
can you do two more questions from the same year?
ques 4 and 11
thank you :D
4
1kG beef = 3kg lamb
1kG beef Price = 2 x lamb price
so as u see He gives up 1 kg beef to produce 3 kg lamb & vice versa
if he gives up lamb production he gains 2 x lamb price(for 3 lamb given up) , but however if he decides to produce lamb he gets 3 x lamb price for (1kg beef given up which equals to 3 lamb units) .
He has a better advantage in producing lamb than beef
11)
well if supply of y is increased, price of y would reduce & therefore since the goods are complements(goods used together) the demand for X would increase ,which would raise both price & quantity demanded of good X
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thanks dasith,
i get the answers now when you guys are explaining it...but how will i do it in exam?? :( ??? i will be confused then plus i have less time!!
any tips?
edit:
i have a question...if a BBC (british broadcasting) increased its license fee(its compulsory on the viewers), will it have any affect on the production possiblity curve (assuming it only supplies educational and popular programmes)
my answer would be no, because even if it earns more money it wont be able to buy more time in a day to air more programmes, right?
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thanks dasith,
i get the answers now when you guys are explaining it...but how will i do it in exam?? :( ??? i will be confused then plus i have less time!!
any tips?
edit:
i have a question...if a BBC (british broadcasting) increased its license fee(its compulsory on the viewers), will it have any affect on the production possiblity curve (assuming it only supplies educational and popular programmes)
my answer would be no, because even if it earns more money it wont be able to buy more time in a day to air more programmes, right?
Not exactly ,The BBC might lack money it might be one of its limited resources , but if it manages to increase price & get enough money , its ability/capacity to produce more programs increases , in a PPC its not only the actual production we see , but also the capacity.So its likely to pan/shift right.
But different ppl can argue out in different ways, if you come up with enogh points to prove your answer, u are most likely to get marks.
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Not exactly ,The BBC might lack money it might be one of its limited resources , but if it manages to increase price & get enough money , its ability/capacity to produce more programs increases , in a PPC its not only the actual production we see , but also the capacity.So its likely to pan/shift right.
But different ppl can argue out in different ways, if you come up with enogh points to prove your answer, u are most likely to get marks.
even if BBC lacks money, with increased funds, it cannot buy more time in a day!! its unattainable according to me.
like in 24hours of the day , it used 10hrs for educational programmes and 14hrs for popular(including all the re-runs and commercials)...even if BBC increases its licence fee, it cannot buy extra hours of the day right?? it will not be shift but movement is possible!
maybe with the extra money it can only increase the quality of its service! :-\
if you this answer could be right..umm how to write it in the paper??
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even if BBC lacks money, with increased funds, it cannot buy more time in a day!! its unattainable according to me.
like in 24hours of the day , it used 10hrs for educational programmes and 14hrs for popular(including all the re-runs and commercials)...even if BBC increases its licence fee, it cannot buy extra hours of the day right?? it will not be shift but movement is possible!
maybe with the extra money it can only increase the quality of its service! :-\
if you this answer could be right..umm how to write it in the paper??
could you provide me the whole question pleaz , i'd be able to help u more then,
well if they are Providing their servise all 24/7 then its impossible to increase their production. But it their capacity to start up another channel increases , & possibly the quality of the servise.Also if theres an increase in spending there is an increase in output.
Income=Expenditure=output
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could you provide me the whole question pleaz , i'd be able to help u more then,
well if they are Providing their servise all 24/7 then its impossible to increase their production. But it their capacity to start up another channel increases , & possibly the quality of the servise.Also if theres an increase in spending there is an increase in output.
Income=Expenditure=output
ummm the question wasnt very informative!
may/june 2007 p2 question (a.1) and (c.2)
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ummm the question wasnt very informative!
may/june 2007 p2 question (a.1) and (c.2)
It should be a sh*t of PPC to the right , because their capacity of producing more programms increases,(just like i said in my prev post). it is true that the BBC cannot produce more channels as they are producing broadcasting 24 hrs. But its not how much you produce is shown in a PPC , but how much you can produce.. ,even thaugh it production of more may seem impossible..., but in this case it cannot be said its impossible to produce more , BBC could start up another channel & do programmes.
Refer examiners reports for further info , i think its wat they expect.
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in C.(ii)
you can say ,why education & health are considerd to be public goods: give reasons,
why they are not to be considerd public : give reasons
Finally arive @ a conclusion why they can/ cant be considered public.(you might want to come up with enough & good reasons on one side to come up with a strong conclusion)
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@dasith-
thanks a bunch!! :D :D (once again) you helped me loads! :)
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i have a doubt again!
paper 1,oct/nov 2005, ques 5.
i dont get why the answer is C...please help! :-\
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I'm not really sure what the problem is here. By simple elimination one can conclude the correct option is C. All types of demand did not follow the same trend..as you can see some decreased first and then increased while some continuously increased. Industrial use did not have the greatest fall in demand as it fell from 340.6 to 338.5 which is about 2.1 fall...You would notice that Photography fell by much more. As for option D..just add the different demands in 1999 and 2011 and compare it..you would find that demand has fallen rather than increased.
By elimination this leaves Option C...which is also the only answer which can be said for sure to be correct as demand has increased continuously throughout the time period. Hope that explains things for you!
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I'm not really sure what the problem is here. By simple elimination one can conclude the correct option is C. All types of demand did not follow the same trend..as you can see some decreased first and then increased while some continuously increased. Industrial use did not have the greatest fall in demand as it fell from 340.6 to 338.5 which is about 2.1 fall...You would notice that Photography fell by much more. As for option D..just add the different demands in 1999 and 2011 and compare it..you would find that demand has fallen rather than increased.
By elimination this leaves Option C...which is also the only answer which can be said for sure to be correct as demand has increased continuously throughout the time period. Hope that explains things for you!
thank youuuuu!
lol...i seemed to have miss read the numbers! :S :-[