Details Total = 25 marks. Marks will be converted to 15 per cent. This assignment is worth 15 percent of the overall marks. Student must explain their answers in detail to be awarded good grades. Graphs should be used wherever possible to support the explanation. The assignment must be typed but the graphs can be hand drawn. Please write your name and student ID on the front page. Late submission will attract a penalty of 10 percent per day up to a maximum of three (3) days, including weekend and public holidays. PLAGIARISM - ALLOWABLE SIMILARITY INDEX IS 20% QUESTION 1 Marks a. Economist can use two types of economic statements to engage with governments. Provide an example of both the statements and explain their purpose. 2 Marks What are and why do firms have to address the three fundamental economic production questions? 2 Marks Explain two ways to increase the efficiency of each of the three factors of production. 3 Marks QUESTION 2 a. It was noted that even with the increase in the supply of face masks, the price of face masks increased. Graphically represent and explain why? 2 Marks b. The increase in the demand for alcoholic drinks has lead the government to increase the tax on such drinks. Graphically represent and explain, with demand and supply graphs, the effect on the price and quantity in the market for alcoholic drinks. Hint: address all possibilities in your answer. 3 Marks c. Using the demand curve and appropriate terminology, graphically represent how a decrease in price of a good resulted in you buying more units of it. Provide a reason why the drop in the price made you buy more units. 2 Marks QUESTION 3 Using the concept of a change in demand and/or supply, graphically represent and explain three ways in which a market can be in surplus. Explain how the market adjusts to remove the surplus 3 Marks QUESTION 4 a. A study has estimated that travel in economy class has a price elasticity of demand of 0.75 whilst travel in business class has a price elasticity of demand of 0.4. Explain what the values imply and why are they different. 2 Marks b. Name 2 goods you normally purchase that has an elastic price elasticity of demand and 2 goods whose price elasticity of demand is inelastic. Explain why? 2 Marks QUESTION 5 a. Recent increase in energy price due to world events such as the war in Ukraine has resulted in governments in many countries thinking about placing a price cap. A price cap sets a limit on the price that an energy provider can charge. Graphically, represent the government intention and explain two implications of the price cap. 3 Marks b. Why does public goods have the "Free Rider" problem? 1 Mark