because they know that if they dent buy more now, they will
have to pay much higher prices in future.
The existence of such goods and factors explain why under exceptional case the demand
curve may be positivelysloped as below.
Demand Curve for...
. What is the opportunity cost of working 10 hours a week flipping burgers while in college? If you worked more hours per week, would you experience increasing or constant opportunity cost? That is, would the extra hours require giving up alternative uses of your time that have the same value or an...
2 Labour supply is positivelysloped also because it is assumed that we have the absence of an income effect, namely the tendency of highincome workers to reduce labour supply when their wage increases.
Chapter 3: Unemployment and the AD–AS model
firm picks the amount they are willing to sell; if the price is increased buyers will fall off.
4. Discuss why some long-run average costcurves are steeper on the downward side than others. Discuss fully.
“Long-run average cost equals the long-run cost divided by the quantity produced...
Costcurves can be combined to provide information about firms. In this diagram for example, firms are assumed to be in a perfectly competitivemarket. In a perfectly competitive market the price that firms are faced with would be the price at which the marginal costcurve cuts the average...
Are the following statements true or false? Explain your answers in detail.
1. "Generally speaking the aggregate supply schedule is said to be positivelysloped because of the same reasons a firms supplycurve is positivelysloped".
2. "A short run aggregate supplycurve can be derived by...
passes through the point P= Rs.25 and Qs=500. Give two interpretations of this point on the supplycurve.
7 In 2003, the Men`s Hair company increased the price of its shampoo and subsequently sold more shampoo than 2002. Is the demand curve for this company positivelysloped? When the demand...
specific brand of industry’s differentiated product. Elastic curve due to close substitutes
2) firms have access to same technological knowledge
3) industry contains many firms and each ignores possible reactions of competitors
4) freedom of entry and exit within the industry
Predictions of the...
transport the finished product(at the very least it would be more expensive than transporting the raw materials), locating next to markets reduces transportation costs and minimizes the costs to the firm.
A) Have to visualize it.
B) The household would prefer to live close the CBD but any...
of the boundary
The shape of the curve is dependent on each factor of production because each factor is not equally useful in producing all goods
Example: Opportunity Cost of Your University Degree
Out of pocket mondy: fees and books and materials
4 years* (7,500)= 30,000...
expensive than basket 1. Otherwise, he wouldhave chosen basket 1 at the new prices. Equation (4.8) states that basket 2costs no more than basket 1 at the new prices. Px x2 Py y2 Px x1 Py y1 (4.8)
Why must equation (4.8) be satisfied if the consumer’s choices are consistent with utility...
demand curve Specialization & division of labor Increasing marginal cost Public goods
12. "The compact disk player has literally revolutionized the recording industry with its state-of-the-art sound, clarity, durability, and the fact that it costs less than cassette tape players." Assuming that...
minimized. MES is at the minimum point on a U-shaped long-run average costcurve (output Q
= 4 in Figure 2 bottom panel) and at the corner of an L-shaped long-run average costcurve.
Generally speaking, competition is vigorous when MES is low relative to total industry demand.
This fact follows from the...
labour supplycurve. Under what conditions will this become negatively sloped?
2. Evaluate the widely expressed view that the imposition of a minimum wage inevitably results in a reduction of employment.
3. Critically appraise the view that Britain should not join the EMU.
4. Describe, with...
The quantities of two goods.
Incorrect. The income-consumption curve traces the utility-maximizing combinations of two goods as a consumer's income changes.
Incorrect If food is an inferior good, then
its demand curve will be positivelysloped.
, mainly because of increasing opportunity cost.
1.3 reSource allocatIon
Grade 11 Economics
Perform these tasks: 1 2 Construct a PPC that shows your grades (marks) in economics and in maths so far this year. Calculate the opportunity cost of your grades for the two subjects...
reduce cost of production.
2. Input Prices - changes in the price of variable inputs can cause large and quick shifts in the supplycurve. Changes in fixed input prices would not affect the profit-maximizing level of output since increases in fixed costs don’t increase marginal cost, and thus has no...
10, the increase in demand for inputs causes the price of those inputs to rise. That’s why the ATC curve shifts upward, and that’s why the long-run supplycurve slopes upward. This type of industry— which is the most common—is called an increasingcostindustry. But there are two other (less common...
. What is meant by consumer’s equilibrium? State its condition in case of two commodities.
Q36. Why is indifference curve convex to origin? Explain.
Q37. How many units of a commodity should a consumer buy to get maximum utility? Explain with the help of a numerical example.