Economic Principles

QUESTION 1 aWhat is the economic problem and how is it related to the concept of opportunity cost 2 Marks b-Reflect on an occasion this week where the concept of opportmity cost applied to you. 1 Mark c.What is the difference between normative and positive statement? Give an example of each of these statements that you have used before- Do not use the examples in power point slides discussed in class. 2 + 1 =3 Marks QUESTION 2 a. Using demand and supply graphs illustrate and explain the difference between change in quantity demanded of hats and a change in demand for hats- In your answer explain two factors that will cause a change in the demand for hats 4 Marks b-Reflect on an occasion when you experience these differences- I Mark QUESTION 3 b-Oeteris paribus, at the same time when the demand for yoga services has increased the government has introduced strict regulations that has resulted in a fall in the number of yoga service providers. Using demand and simply graphs illustrate and explain the impact on the equilibriun price and quantity in the market for yoga services HINT: There is more than one outcome- 4 Marks c.Reflect on an occasion, anywhere in the world, where such a situation has occurred. 1 Mark QUESTION 4 In Australia, governments set the fares that taxi owners/drivers can charge. At various times, taxi owners/drivers stage protests asking to be allowed to increase their taxi fares so that their total revenue will increase. aWhat are taxi owners/drivers assuming about the price elasticity of demand for taxi rides, given their confidence that an increase in price will increase their revenue? 2 Marla; b-Why do they have such an assumption? Is it a realistic assumption? 2 Marks      

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