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This document contains an economics assignment with multiple questions covering various topics: 1) A production possibility curve question about scarcity, choice, opportunity cost, and changing slopes. 2) A question about the production possibilities of potatoes and fish for the island of Atlantis, including drawing the curve and calculating opportunity costs. 3) Questions comparing demand and supply curves, and shifts versus movements along the curves caused by different factors. 4) A graphical question about equilibrium price and quantity for cars based on a supply and demand shift. 5) Elasticity questions calculating price and income elasticities of demand for souvenirs. 6) An explanation of the effect of an elastic demand on total revenue from

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ramizul
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329 views

Assignment 1

This document contains an economics assignment with multiple questions covering various topics: 1) A production possibility curve question about scarcity, choice, opportunity cost, and changing slopes. 2) A question about the production possibilities of potatoes and fish for the island of Atlantis, including drawing the curve and calculating opportunity costs. 3) Questions comparing demand and supply curves, and shifts versus movements along the curves caused by different factors. 4) A graphical question about equilibrium price and quantity for cars based on a supply and demand shift. 5) Elasticity questions calculating price and income elasticities of demand for souvenirs. 6) An explanation of the effect of an elastic demand on total revenue from

Uploaded by

ramizul
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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PSP 3000 FAMILY AND CONSUMER ECONOMICS ASSIGNMENT I (10%) PJJ SEM 2 2012/2013 1.

Explain how a production possibility curve illustrates the following economic concepts based on the graph (Video- X axis & Computer- Y axis): a. scarcity b. choice c. opportunity cost d. increasing, decreasing and constant opportunity cost 2. Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fish. The accompanying table shows the maximum annual output combinations of potatoes and fish that can be produced. Maximum annual output options A B C D E F Quantity of potatoes (pounds) 1,000 800 600 400 200 0 Quantity of fish (pounds) 0 300 500 600 650 675

a. Draw a production possibility frontier with potatoes on the horizontal axis and fish on the vertical axis illustrating these options, showing points AF. b. Can Atlantis produce 500 pounds of fish and 800 pounds of potatoes? Explain. Where would this point lie relative to the production possibility frontier? c. What is the opportunity cost of increasing the annual output of potatoes from 600 to 800 pounds? d. What is the opportunity cost of increasing the annual output of potatoes from 200 to 400 pounds? e. Can you explain why the answers to parts c and d are not the same? What does this imply about the slope of the production possibility frontier? 3. i) What are the differences between a demand curve and a supply curve? ii) What are the differences between: a) movement along the demand curve and b) shift in demand? c) movement along the supply curve and d) shift in supply? iii) What are the factors influence ii a), b), c) and d)? Explain.

4. Given the demand and the supply for cars at the market. Price of Cars S1

D1 Quantity of Cars For the following questions, refer to the graph shown above. a. Label the equilibrium point as E1, the equilibrium quantity as Q1, and the equilibrium price as P1. b. Show how the supply curve will change if car manufacturers achieve a technological breakthrough that allows them to produce cars more cheaply. c. If the price stayed at P1, would a surplus or a shortage result from the technological breakthrough described in part (b)? Answer in words, and show on the graph. d. Assuming market forces work quickly, show the new equilibrium price to which the market will adjust. Label this point as E2. Label the new equilibrium quantity as Q2, and the new equilibrium price as P2. e. In words, summarize the information that you have shown in your adjustments to the graph in parts (a) through (d). 5. The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the Langkawi Island according to the average income of the tourists visiting. Price of T-shirt $4 $5 $6 $7 Quantity of T-shirts demanded when the average tourist income is $20,000 3,000 2,400 1,600 800 Quantity of T-shirts demanded when the average tourist income is $30,000 5,000 4,200 3,000 1,800

a. calculate the price elasticity of demand when the price of a T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also calculate it when the average tourist income is $30,000. b. calculate the income elasticity of demand when the price of a T-shirt is $4 and the average tourist income increases from $20,000 to $30,000. Also calculate it when the price is $7.

6. If the demand for a product is elastic, what will happen to the total revenue if price is rises? Explain based on the graph. 7. What are the sign for substitute goods, complementary goods and unrelated goods under the cross price elasticity of demand? Explain and give the example for each of the goods. 8. The table below shows the quantity and marginal utility obtained from consumption of 2 goods, that is X and Y are RM2 respectively. It is assumed that the consumers income of RM22 only spent for these two goods. Quantity 1 2 3 4 5 6 7 8 9 Marginal Utility X 30 29 28 26 24 22 20 18 16 Marginal Utility Y 20 19 18 16 14 12 10 8 5

a. Calculate MUx/Px and MUy/Py at every quantity level. b. Calculate the quantity of X and Y at consumer equilibrium that will maximize the utility of this consumer. c. How much the total utility for both goods that maximize the utility. 9. What is the difference between cardinal utility and ordinal utility? Explain. 10. Household Production: Unpaid activities done by/ for household members, whereby if the economic, financial, market and personal situation permits, the service might be done by other people (Margaret Reid, 1934) a) What does it mean by unpaid activities and give 3 examples? b) What you can conclude from this definition? c) How importance of evaluating household production? 11. a) Give the definition of Lorenz Curve and what does it shows? Explain with a curve. b) What is the Gini Coefficient c) What does it means by Gini Coefficient , G=0 and G=1?

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