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Economics 25 question/5 image

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  • A market is in equilibrium. There is then a fall in supply and an increase in demand for the product. How does this affect the equilibrium price and quantity?
    A
  • The linear demand curve for a product is shown by Qd = 100 – 5p where p is the price in dollars. The linear supply curve is Qs = –20 + 10p. Calculate the equilibrium price of the product.
    $8
  • A government fixes a maximum price for bread. What is the most likely reason for this?
    It is a way of supporting low-income families.
  • A market is in disequilibrium when:
    A there is excess supply in the market.
  • Which component of aggregate demand is predicted to vary the most between the countries shown?
    Consumer expenditure
  • A firm supplies 10 units of a product at $48 per unit. If the PES is 4, how many units will the firm supply at a price of $60 per unit?
    20
  • These extra items of spending, known as (1)___, are (2)___, (3) and spending by foreigners on a country’s exports.
    These extra items of spending, known as injections, are investment, government spending and spending by foreigners on a country’s exports.
  • Which of these estimates of PES is most likely to apply to the supply of raw coffee beans? a)0.1  b)1  c)1.1  d)10
    A
  • Producer surplus is:
    the difference between what a producer is willing to accept and what is actually paid.
  • Explain whether you think consumer expenditure will be of a higher value in Pakistan than the USA in 2025.
    Consumer expenditure is likely to be lower.
  • From the diagram, calculate the producer surplus.
    $3000
  • Consumer surplus is :
    when there is a difference in the price a consumer is willing to pay for a good and its market price.
  • In the diagram, D is the demand curve for a chocolate bar and S is the initial supply. An increase in production causes the supply curve to shift to S1. What is the gain in consumer surplus?
    b+e+f
  • Identify the links between households and firms in the factor market
    Households as factors of production sell their services to firms and firms pay for their services.
  • The price of a product falls from $5 to $4. As a result, its supply in a given time period falls from 800 units to 700 units. What is the PES?
    0.625
  • Which countries’ international economies are predicted to make a positive contribution to aggregate demand?
    China and Russia
  • A rise in saving or imports will also cause GDP to fall, at least in the____
    short run
  • A market is in equilibrium. If there is an increase in supply and no change in demand, how does this affect the equilibrium position?
    Equilibrium price falls and equilibrium quantity rises.
  • A train journey is an example of a derived demand because:
    it is necessary in order to get too work.
  • Identify the links between households and firms in the product market.
    Households buy products from firms and firms sell products to households
  • What is the relationship between lemons and lemon juice?
    Derived demand
  • In very hot weather, an ice cream manufacturer decides to increase the price of its product by 10%. It is able to increase production by 6% one week after the price increase was announced. How can the PES be described?
    B
  • The price elasticity of supply is:
    the percentage change in quantity supplied given a change in price.
  • The short-run supply of fresh flowers for export from Kenya to the UK is less price elastic than the supply of green beans. Why is this?
    Fresh flowers cannot be stored for as long as green beans.
  • Governments provide minimum prices for agricultural products in order to:
    stabilise farmers' incomes
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