Economics Answers

discuss three broad functions of the government

1. With aid of diagrams derive the demand curve of the consumer preference from the total utility graph.
2. Using graphical approach distinguish between Diminishing utility, Marginal Benefits and marginal Cost

n increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.

(Note: Five marks will be awarded for the graph and five marks will be awarded for the explanation.)

Explain, with the aid of a graph, the effect of an interest rate decrease on the (7) money market equilibrium.

explain, with the use of a graph, the impact this had on the demand and supply of dollars and the exchange rate in South Africa.

Suppose, the government has decided that the free-market price of sugar is too low.

Government has imposed a binding price floor of per kg sugar at 60 taka, whereas,

the market price was 50 taka per kg before the announcement.

a. Explain the effects of this flooring price on the demand and supply of the sugar

market. In your graph, show the effects of the price changes on quantity

demanded and quantity supplied. Does it create excess supply or excess

demand? What will happen to the market price?

b. In the above situation, who (buyers or sellers) is going to get the benefit from

such policy? Explain it in your own words (clue: use a graph where a Price

flooring is binding).

Give two examples of important trade-offs that you face in your life.

a. Draw a production possibilities frontier to illustrate your each trade-off

situation. What do you suppose determines the shape and position of the

frontier?

b. Using the concept of opportunity costs, explain whether you had a bowed-out

shape PPF or straight line PPF?

On March 31,2021,M. Belottipurchased the right to remove gravelfrom an old rock quarry.The gravelIs to be sold as roadbed for highway construction. The cost of the quarry rights was $331,200,with estimated salable rock of 36,000 tons.During 2021,Belotli loaded and sold 5,000 tons of rock and estimated that 31,000 tons remained at December 31,2021. At January 1,2022,Belotti estimated that 15,000 tons still remained. During 2022,Belotli loaded and sold 10,000 tons. Belotti uses the units-of-production method.

Explain how fiscal policy can be used to encourage economic growth.(4)

what is a toll bridge characterized by