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Economics Notes For - Test - November

1) This document contains an economics test with two multiple choice questions and two long answer questions about gym memberships and an Australian firm setting up production in the UK. 2) For the first long answer question, the document argues that gym memberships should be subsidized by the government rather than taxed, as it would encourage health, exercise, and increased income and employment. 3) For the second question, it states that the new Australian firm producing in the UK would likely hire some local UK workers, increasing the quantity of labor and reducing unemployment, though the firm may also bring some of its own Australian employees.

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Wai Hpone
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35 views2 pages

Economics Notes For - Test - November

1) This document contains an economics test with two multiple choice questions and two long answer questions about gym memberships and an Australian firm setting up production in the UK. 2) For the first long answer question, the document argues that gym memberships should be subsidized by the government rather than taxed, as it would encourage health, exercise, and increased income and employment. 3) For the second question, it states that the new Australian firm producing in the UK would likely hire some local UK workers, increasing the quantity of labor and reducing unemployment, though the firm may also bring some of its own Australian employees.

Uploaded by

Wai Hpone
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Economics Test (25/11/2021)

1 MCQ
1) A
2) B
3) B
4) D
5) D
2 Questions
1) Gym membership
a) A normal good is a product or service that has an increase in demand due to an
increase in income of the consumers.
b) A complement is a good or service that goes well with another product, such as
a toothbrush and toothbrush. This means that these goods or services are usually
bought together. Substitutes are services or products that can replace another
good, like how another brand of soft drink can be bought when a specific soft drink
is not available for purchase or not favorable by the consumers.
c) Price
S1 D
S D1

P1
P

D S2
D1
S
0 Q Q1 Quantities
There would be an increase in price and quantity as there is a decrease in demand
due to the taxes and an increase in supply due to people not joining the
memberships.
d) A subsidy is a form of financial support to a firm or a business to improve its
sales and economic prosperity. A government’s aim is to improve society and have a
satisfied demographic in the economy of the country, so promoting the use of gyms
and maintaining a healthy lifestyle should be a priority. Instead of taxing gym
memberships, the government should subsidize it, to raise awareness of proper
exercise. This would also encourage consumers to work harder to increase their
income, as gym memberships are a normal good, meaning increased income equals
higher demand. Taxation of a good that offers multiple health benefits should not
be an action that a government take. There would also be an increase of the
demand of sportswear and equipment, which are complements to going to the gym.
This raises more demand and firms producing these goods will also sell more.
Creating more jobs and decreasing unemployment in a country would also be
beneficial to a government, allowing increased GDP and more income. In
conclusion, gym memberships should not be taxed and instead subsidized.
2) Australian firm
a) An entrepreneur is a person who sets up businesses and takes the risk of
financial loss and stability in order to make profit, which may or may not come to
fruition.
b) A free good is a product or service that does not require any resources to
produce and so does not have any opportunity cost. Examples of these goods are
air, water and sunlight. An economic good is a product or service that requires the
use of resources in order to produce it so therefore, has opportunity costs. These
include oil, education, and canned food.
c) Quality of labour

A B Labour

There would be an increase in the quality of labour due to the increase in the
quantity of labour, shifting from point A to point B.
d) When there is a new firm or a business in a
country, there would be an increase in labour and decrease in unemployment. This
is because a new industry and production would hire people to work in their
organization, or not there would not be any products or services produced from the
business. However, this firm is Australian, meaning they could more likely already
have their own employees and workers from Australia. They could still hire more
less significant workers from the UK and maybe someone higher up in the chain of
command, but nonetheless, there would still be an increase in the quantity of
labour in the UK. Increased quantity of labour would definitely be beneficial to the
UK, so its government would likely have some rules and regulations to instill in the
project. Since the production is in UK territory, a percentage of its output would
have to go towards the Cornwall, where the industry would be located. The project
would also have acquired the permission of the government to place its production
there, so there would have been some conditions being given to the Australian firm.
With this new production, the quantity of labour in the UK is likely to increase in the
future, due to new employment opportunities for its citizens.

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