Sunday, September 13, 2009
Econs Checklists 3 & 4
Please prepare your answers to the following checklists. You can do work division among your group members. Your answers should also be type- written, which will make it easier to make changes, while diagrams should be hand-drawn as a form of practice. Please do not just copy from the lecture notes. It will be good if you can attempt these questions without reference to your lecture notes. Each group will compile a set of answers for revision to be submitted by Wed 16/09/09.
Checklist 3 for Dd/Ss/Elasticities
Can you clearly explain…
1. The determination of equilibrium price and output in the Dd/Ss framework? (explain the adjustment process wrt diagram)
2. (a) at least 3 factors that will affect the
(i) demand for a good?
(ii) supply of a good?
[single shift: clearly indicate whether dd/ss will shift left or right]
b) how particular key words/phrases: eg.“ economic boom” and “firms expect profits for private housing market to increase” will affect the equilibrium price and output for private housing? (double shift: explain adj process wrt diagram)
3. government intervention in the
(i) labour market to ensure a minimum wage for workers?
(ii) goods market to ensure basic necessities are not overpriced?
[explain impact on the market wrt diagram]
What are the limitations in each case?
4. At least 3 factors that will fact the (i) PedA (ii) PesA? (wrt diagrams)
5. Significance of the sign and magnitude of (i) PedA, (ii) YedA, (iii) XedAB.
[you should be able to state definitions/formulae of PedA, YedA, XedAB, PesA]
6. How useful are PedA, YedA, XedAB, PesA to a firm in its aim to maximize profits?
Checklist 4 for Market Failure
Can you clearly explain…
Wrt relevant diagrams,
1.(i) how market failure occurs in the following cases wrt to a specific example?
(ii) types of government intervention to correct market failure in each case?
(iii) the limitations of government intervention in each case?
Cases:
(a) negative externalities in production/consumption ?
(b) positive externalities in production/consumption?
(c) demerit goods/ merit goods
(d) public goods
(e) monopoly power
(f) factor immobility
(g) information failure
(h) inequity
2. possible causes for government failure?
There are two ways of meeting difficulties. You alter the difficulties or you alter yourself to meet them.
Phyllis Bottome
10:50 PM
