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In the article “An early contribution to theoretical literature”, JC Harsanyi
cogently argues that economic decisions free of bias can be obtained by
placing decision makers in a position of ignorance. What is the further
opinion about the distribution of income according to Harsanyi?
If government imposes a maximum price of 48, calculate the resulting
shortage and discuss on its effectiveness of such a policy
Interpret and explain the diagram below, which illustrates the effect of airline
regulations by the civil aeronautics board. Indicate what effect the regulation will
have on airlines’ sales, output and profit, and also what consumers are losing or
gaining in the process.
Define an isoquant and then explain what decreasing returns of scale
implies. What happens to the isoquants on an isoquant map in such an
instance?
Explain what the income consumption curve is in terms of individual and
market demand.
By using a relevant diagram, illustrate and explain how the market
demand curve is derived. A brief explanatory discussion of the graph is
required with reference to price and quantity.
In general, changes in price and quantity depend on the amount by which the
demand and supply curves shift, in which direction they shift and the shape of
each curve. With this statement in mind, illustrate by drawing a single graph the
new price and quantity at a new equilibrium when both curves shift to the right,
but the shift in the demand curve is larger than the shift in the supply curve.
What do you understand price elasticity of supply to be? Indicate if the
coefficient is usually positive or negative and why. (3)
3.4 With reference to price elasticity of demand, answer the following
questions:
3.4.1 Indicate what the two (2) main determinants are that price elasticity
of demand depends on. (2)
3.4.2 With the aid of a diagram (draw the diagram), illustrate and explain
what a linear demand curve is, where exactly the top of the curve is
and where the bottom of the curve is, and how elasticity values
(coefficients) vary on the curve from being infinitely (perfectly)
elastic to unit elastic and finally to completely (perfectly) inelastic.
A change in wages causes a _____
A. change in the marginal product curve for labour.
B. shift in the marginal physical product curve for labour.
C. shift in the derived demand curve for labour.
D. shift in the marginal revenue curve for labour.
E. movement along the demand curve for labour.
A change in wages causes a _____
A. change in the marginal product curve for labour.
B. shift in the marginal physical product curve for labour.
C. shift in the derived demand curve for labour.
D. shift in the marginal revenue curve for labour.
E. movement along the demand curve for labour.
