This would represent an increase

in the supply of labour. Wages will

fall for those jobs for which
students wish to offer themselves.
This would represent an increase
in the supply of labour. Wages will
fall for those jobs for which
students wish to offer themselves.
This would represent an increase
in the supply of labour. Wages will
fall for those jobs for which
students wish to offer themselves.
This would represent an increase
in the supply of labour. Wages will
fall for those jobs for which
students wish to offer themselves.
This would represent an increase
in the supply of labour. Wages will
fall for those jobs for which
students wish to offer themselves.
Question №1

This would mean an increase in the supply of labor. Wages will fall for those jobs for which students
want to offer themselves since the number of jobs will be large, which is why wages will be distributed
evenly.

Question №2

This would be too bureaucratic, even by command economy standards. Even with modern information
technology, it would probably be too costly to plan for, deliver to and monitor individuals.

Question №3

a) Positive, since this fact is objective (b) Normative since the fact is not accurate and there may be a
value judgment (c) Positive since it is possible to refer to evidence in the form of numbers (d) Normative
since it is not possible to prove it scientifically.

Question №4

А) Positive economic statements can be tested against evidence while normative statements, even if
they are made by economists, cannot. (b)Beginning from an inefficient point to the left of the
production possibility frontier, efficiency gains can increase the production of some commodities
without sacrificing others and thus yield a “free lunch.” (c) Economics is a social science with all the
limitations which that classification implies. The scientific method can be used to study human behavior,
but it is often more useful to refer to economic tendencies rather than economic laws.

Question №5

(a) Macroeconomics (b) Microeconomics (c) Microeconomics (d) Macroeconomics

Question №6

There are many more producers of coffee than of oil, so it is much more difficult to coordinate them.
Also, the demand for coffee is more elastic than the demand for oil, so a reduction in supply does not
have quite so much impact on the price. High prices are also an incentive for cartel members to cheat on
the collective agreement to restrict output – an individual producer that raises its output gets much
higher income. (b) It would fail because the UK would simply be swamped by cheap textile imports.

Question №7
(a) The price of oil will be around $50 a barrel. (b) Yes, until the biofuel process is on stream. (c) Higher
oil prices in the short run increase the incentive to look for alternative energy technologies

Question №8

(a) As shown in the figure, the production possibilities frontier will be a down-sloping line joining15
shirts and 20 cakes. (b) 20 cakes (5 workers x 4 cakes) (c) All points below the frontier. (d) No, such
combinations are unattainable. Given the inputs available, such output combinations cannot be made.
Scarce resources limit society to a choice of points inside or on the production possibility frontier.
Society must choose how to allocate these scarce resources between competing uses. (e) The
opportunity cost of making a shirt = 1.33 cakes; the opportunity cost of making a cake = 0.75 shirts (f)
No, because the production possibility frontier is a straight line

Question №9

With 100 workers, that economy

can produce 50 units of clothing
and no food, or 100 units of
food and no clothing.
Therefore with Clothing on
the y (vertical) axis and
Food on the x
(horizontal) axis, mark points at 50
on the y axis and 100 on the x axis.
Join these with a straight
line. This is the production
possibility frontier. The gradient of
the line is ∆y/∆x = -1/2 (The
gradient is negative because the
line is downward sloping)
With 100 workers, that economy
can produce 50 units of clothing
and no food, or 100 units of
food and no clothing.
Therefore with Clothing on
the y (vertical) axis and
Food on the x
(horizontal) axis, mark points at 50
on the y axis and 100 on the x axis.
Join these with a straight
line. This is the production
possibility frontier. The gradient of
the line is ∆y/∆x = -1/2 (The
gradient is negative because the
line is downward sloping)
With 100 workers, that economy
can produce 50 units of clothing
and no food, or 100 units of
food and no clothing.
Therefore with Clothing on
the y (vertical) axis and
Food on the x
(horizontal) axis, mark points at 50
on the y axis and 100 on the x axis.
Join these with a straight
line. This is the production
possibility frontier. The gradient of
the line is ∆y/∆x = -1/2 (The
gradient is negative because the
line is downward sloping)
With 100 workers, that economy
can produce 50 units of clothing
and no food, or 100 units of
food and no clothing.
Therefore with Clothing on
the y (vertical) axis and
Food on the x
(horizontal) axis, mark points at 50
on the y axis and 100 on the x axis.
Join these with a straight
line. This is the production
possibility frontier. The gradient of
the line is ∆y/∆x = -1/2 (The
gradient is negative because the
line is downward sloping)
With 100 workers, that economy
can produce 50 units of clothing
and no food, or 100 units of
food and no clothing.
Therefore with Clothing on
the y (vertical) axis and
Food on the x
(horizontal) axis, mark points at 50
on the y axis and 100 on the x axis.
Join these with a straight
line. This is the production
possibility frontier. The gradient of
the line is ∆y/∆x = -1/2 (The
gradient is negative because the
line is downward sloping)
With 100 workers, that economy
can produce 50 units of clothing
and no food, or 100 units of
food and no clothing.
Therefore with Clothing on
the y (vertical) axis and
Food on the x
(horizontal) axis, mark points at 50
on the y axis and 100 on the x axis.
Join these with a straight
line. This is the production
possibility frontier. The gradient of
the line is ∆y/∆x = -1/2 (The
gradient is negative because the
line is downward sloping)
With 100 workers, that economy can produce 50 units of clothing and no food or 100 units of

food and no clothing. Therefore, with Clothing on the y (vertical) axis and Food on the x

(horizontal) axis, mark points at 50 on the y-axis and 100 on the x-axis. Join these with a straight

line. This is the production possibility frontier. The gradient of the line is ∆y/∆x = -1/2 (The

the gradient is negative because the line is downward sloping)