Answer Any 7 Of The Following 9 Questions. Be Concise. A Par ✓ Solved

Answer any 7 of the following 9 questions. Be concise. A para

1. The opportunity cost of going skiing for the weekend includes both the direct costs of the trip and any lost income from not working. The transportation, lift tickets, and accommodation total $350, and the cost of restaurant food is $90, making the total expenses $440. Additionally, if you miss a weekend of work, you forfeit $150. Thus, the total opportunity cost is $440 + $150 = $590. No other information is needed to compute this opportunity cost as it includes all explicit and implicit costs.

2a. To calculate the price elasticity of demand between $2.00 and $3.00, we use the formula for elasticity: E_d = (% Change in Quantity Demanded) / (% Change in Price). The quantity demanded changes from 4,200 to 3,000 cans (a decrease of 1,200 cans) and price changes from $2.00 to $3.00. The percentage change in quantity demanded is (-1,200 / 4,200) 100 = -28.57%, and the percentage change in price is ((3.00 - 2.00) / 2.00) 100 = 50%. Therefore, E_d = -28.57% / 50% = -0.571. Demand is inelastic since the absolute value is less than 1.

2b. The price elasticity of supply can be calculated using the same method. The quantity supplied changes from 4,200 to 4,500 cans (an increase of 300 cans). The percentage change in quantity supplied is (300 / 4,200) * 100 = 7.14%, while the percentage change in price remains the same at 50%. Thus, E_s = 7.14% / 50% = 0.143. Supply is also inelastic since the absolute value is less than 1.

3a. The statement about good weather resulting in a record wheat harvest and tumbling prices suggests the inelasticity of supply. Farmers cannot quickly adjust their production levels in response to high supply quickly causing lower prices to impact their revenue adversely.

3b. The second statement demonstrates the inelasticity of demand for bus rides. While demand increases as fares decrease, the overall revenue still drops, indicating that the increase in demand is not sufficient to compensate for the lower fares.

3c. The statement regarding cell phones indicates that demand may be elastic. As prices drop, the volume sold increases significantly, leading producers to generate higher revenue, highlighting how responsive demand is to price changes.

4. The production possibilities boundary illustrates three concepts: opportunity cost, efficiency, and economic growth. When resources are allocated towards one good over another, the opportunity cost represents the amount of the other good sacrificed. For example, producing more consumer goods means less capital goods are available, representing efficiency in resource use. Lastly, any outward shift in the boundary represents economic growth, allowing for increased production capabilities.

5a. To find the equilibrium price of potash, we compare the supplied and demanded quantities. The equilibrium price is where quantity supplied equals quantity demanded. Without specific numbers given in the hypothetical market, one would typically compare these on a graph or chart.

5b. If the price of potash is $280 per tonne, we would look at the demand schedule to determine how much potash would be purchased. This would typically require specific demand figures to calculate.

5c. Similarly, if the price is set to $380 per tonne, we need the demand schedule to ascertain how much would be sold versus supplied.

5d. If at $280 per tonne the quantity supplied exceeds demanded, there would be excess supply. The difference between these quantities indicates how much excess supply exists.

5e. Conversely, if at $380 per tonne the quantity demanded exceeds quantity supplied, there would be excess demand, which can be calculated the same way.

6a. Without the specific values for prices and quantities, total expenditure for each row would be calculated using the formula: Total Expenditure = Price × Quantity Demanded.

6b. Price elasticities between points can be determined using the same elasticity formulas as previously discussed, looking at how quantities demanded change relative to price.

6d. An elastic range occurs when a decrease in price leads to a proportionally higher increase in quantity demanded. This would typically be identified in a certain price range through analysis.

6e. An inelastic range exists when the price change results in a less than proportionate change in quantity demanded.

7. A recent article on government policy related to transportation costs increasing suggests a higher opportunity cost associated with driving compared to using public transportation. The opportunity cost is the time and money lost in choosing less efficient options.

8a. Over the last five years, the trend in new housing demand in Canada has generally increased due to factors such as population growth and low-interest rates, driving a buyer's market that supports new constructions.

8b. In certain provinces, like British Columbia, demand may have outpaced the national trend due to urbanization and housing shortages, illustrating regional variations in market dynamics.

9. Browsing through a book marketplace, the variety of pricing for new and used copies of the same title indicates a competitive market. Sellers vary their offerings based on condition and pricing, allowing consumers to choose based on their preferences and budget, which exemplifies a competitive market.

Paper For Above Instructions

The analysis of various economic principles through the seven selected questions provides insight into decision-making regarding opportunity cost, elasticity of demand and supply, and market dynamics. Each question reflects core concepts in microeconomics that shape both individual and market behaviors.

References

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