👑Microeconomics and Consumer Behavior  Essays

With the use of diagrams, explain how the price elasticity of demand for a product influences the incidence of an indirect tax on that product. [8]

Farms in the USA are getting larger. One dairy farm in the state of Indiana has over 38 000 cows. Farms in the USA compete with farms in both developed and developing countries. The value of the farms’ exports of milk appears in the trade in goods section of the current account of the USA’s balance of payments

Analyse the economies of scale from which a farm may benefit.

Nauru is one of the smallest countries in the world with a population of only 10 000. Fifty years ago the population was one of the richest per head in the world, largely the result of exporting the phosphate created over many centuries by sea-bird droppings. This labour-intensive industry has declined significantly. Now incomes are much lower and one third of workers are jobless.

Discuss whether having a relatively small population is an advantage or a disadvantage for an economy. [8]

Explain how economists use the concept of income elasticity of demand to distinguish between different types of goods.

Show the difference between a movement along, and a shift in, a production possibility curve. Explain what might cause each to occur. Use diagrams to support your answer. [8]

In Pakistan there is a limited choice of cars to buy. The country has a population of approximately 190 million but only about 120 000 cars a year are produced there. The firms producing cars in Pakistan are protected from foreign competition by a range of methods of trade protection.

Analyse the social costs created by car production and car use. [6]

Explain how economists use the concept of elasticity to distinguish between substitute goods and complementary goods.

Discuss which measure of the different types of elasticity of demand is most useful for a business when setting the price for its product.[12]

Indonesia’s output is influenced by its factors of production. A production possibility curve diagram can be used to show this relationship between resources and output. Indonesia does have extensive fishing waters but does not actually catch many fish. Most of its fishing firms are small and they compete against much larger foreign firms. These larger foreign firms have been attracted into Indonesia’s waters because of increasing demand for fish. The price elasticity of demand for different types of fish has changed in the last few years.

Analyse why demand for a product may become more elastic over time. [6]

A relatively high proportion of people from the Philippines either work in call centres or abroad. Call centres employ 1.2 million people in the Philippines and account for 8% of the country’s Gross Domestic Product. Due to the time difference with the US, the main market for call centre services, many Filipinos have to work at night. The call centres are introducing new technology including robots.

Analyse how advances in technology can affect demand and supply.[6]

Use examples to illustrate the difference between private goods and public goods and explain why only private goods will be supplied in a free market economy. [8]

‘The factor enterprise and the free working of the price mechanism always ensure a satisfactory outcome for consumers even when imperfect information exists.’ Discuss this view.