Economics Questions Thread

[Hutchoo]

It's pretty much the definition of when demand is based on price elasticity.

In this question, demand is price elastic meaning that a small change in price will result in a large change in the expenditure/supply.

It's ultimately saying that if the price of the good/service is increased, the change in supply costs will decrease meaning that companies will spend less money (expending) meaning that less of the product/service will be supplied.

It's a really rough/sketchy answer, but I hope it helped in some way.

[Water]

It's pretty much the definition of when demand is based on price elasticity.

In this question, demand is price elastic meaning that a small change in price will result in a large change in the expenditure/supply.

It's ultimately saying that if the price of the good/service is increased, the change in supply costs will decrease meaning that companies will spend less money (expending) meaning that less of the product/service will be supplied.

It's a really rough/sketchy answer, but I hope it helped in some way.

I think your delving too much into the question, I don't think you can refer price elasticity to the question. Just knowing its price elastic, meaning that the change in prices is enough for the question.


As the question doesn't say whether the product has high price elasticity, or low elasticity, and if you regard it that way, then your just merely putting your own assumption.Thus the PED is irrelevant to the question and will only confuse your answer. Yeh, now that I said that, this question only requires us to think simply, thinking too much would overcomplicate an otherwise simple question, merely thinking about the demand curve is enough, on where it movements along the demand curve.






Btw PED = Percentage Change in Demand / Percentage change in price (pricing of your product that is)


Furthermore, PED is irrelevant to the question because it does not address the the supply / expenditure side, which a demand curve would, and if so, is only vaguely touched on through "price elastic".



PS: MY Reasoning and logic could be totally rubbish though in answering the question, and I could be totally wrong in my explanation above. Lol. HOPEFULLY NOT.

[DNAngel]

Another question.

What exactly is Gross Domestic Product (GDP), i.e, what's the exact definition and how does it apply to each country's economy?

[Hutchoo]

TEXTBOOK DEFINITION:
GDP is an indicator of the value of a nation's output. GDP represents the total market value of final goods and services produced by a country over a period of time (usually a year) minus the costs of inputs used up in production, other than the cost of capital equipment. GDP applies to every countries economy as every country has goods and services that can be measured and put into a national output.

[chrisjb]

I didn't have access to an economics teacher this week, so I'm coming to you guys once again

My question is about opportunity cost. If someone chosses to invest their resources in a way which is not the most profitable means, is the opportunity cost the next best alternative allocation (going down in terms of price) or the best alternative allocation?

If that didn't make much sense, here's an example. A farmer can choose to rear sheep, cattle or pigs on his farm.
Cattle= $10 profit
Sheep= $20 profit
Pigs=    $30 profit

If the farmer then chooses to rear sheep, is the opportunity cost $10 (the next best alternative) or $30 (the best alternative)?

[gs]

If that didn't make much sense, here's an example. A farmer can choose to rear sheep, cattle or pigs on his farm.
Cattle= $10 profit
Sheep= $20 profit
Pigs=    $30 profit

If the farmer then chooses to rear sheep, is the opportunity cost $10 (the next best alternative) or $30 (the best alternative)?

The opportunity cost would be pigs @ $30 being the best alternative IMO.

[Hutchoo]

Most people define the next best alternative to a materialistic standard ($).
The opportunity cost would be pigs @ 30.

[Hutchoo]

This one is really quite simple and should be well known, but...
Explain the laws of demand and supply (4 marks)

How would you answer that in a SAC?

[chrisjb]

I would write:

1) the law of demand
2) the factors causing this
3) the law of supply
4) the factors causing this

Something like:

The law of demand is that generaly as the price of a good or service increases, the quantity of that good or service demanded will decrease. Likewise, as price decreases, demand will increase. The law of demand results from the fact that consumers have limited budgets and that when price exceeds the amount a consumer considers a product to be worth they (when rational) will not buy it.
The law of supply is that generaly as the price of a good or service increases, the quantity of that good good or service supplied will increase. Likewise, as the price of a good or service decreases suply will decrease. This is becuase firms will seek to exploit profits in an industry and if the price of a product increaes without production costs increasing to the same degree, it will be more profitable to produce and therefore more will firms will be seduced into making it.

[Water]

Insert Quote
This one is really quite simple and should be well known, but...
Explain the laws of demand and supply (4 marks)

How would you answer that in a SAC?




Wouldn't I get full marks if I just said???

Law Of Demand
-As Prices Increase, Quantity Decrease
-As prices increases, there is greater opportunity cost. Hence Quantity decrease along the way

Law Of Supply

- As Prices Increases, Quantity Increases
- As companies increase supply, incentive for companies to make more more revenue.




Hoping, I would, I hate writing alot for ecos. Lol, Makes the marker tired, and makes my hands tired ):



 

[Hutchoo]

That's what I'm confused with
I would think that an answer like that is only worth two marks.
Law of demand = 1 mark.
Law of supply = 1 mark.
Where are the other 2?

[Water]

Just added, two extra dot points, perhaps that'd gain you the +2 marks? Lol, ask your SAC teacher, I'm going to ask my eco teacher with this question. My Teacher says, rather than messy/scribbling your sac. Make concise points than beating around in the bush.

Let you know on Monday.



PS @ Below Post: Good Luck, Rofl! Ask your eco teacher, before the SAC

[Hutchoo]

My SAC is on Monday

[Hutchoo]

What does the elasticity of demand measure? (2 marks).

[Water]

Elasticity of Demand is a measure of the responsive of the   change in quantity of demand to change in price.

Formula to calculate PED :   %Change in Quantity Demanded / % Change in Price.




Good Revision stuff for me