Question 1 a. Draw a production possibilities curve for a hypothetical economy producing capital goods and consumer goods Illustrate economic growth and use (A) to represent an inefficient b. Explain the law of increasing opportunity cost. c. Explain why scarcity forces individuals and society to incur opportunity costs. Give three (3) specific examples. Question 2 Market researchers have studied the market for orange juice, and their estimates for the supply and the demand for orange juice per month are as follows: Price per gallon ($) 250 2115 200 150 100 50 Quantity demanded 200 300 400 500 600 Quantity Supplied 600 500 400 300 200 a. Using the above data, graph the demand for and the supply of orange juice. Identify the equilibrium point as E, and use dotted lines to connect E to the equilibrium price on the price axis and equilibrium quantity on the quantity axis. .. b. Assume that the government decided to set a price ceiling of $100 per gallon. i) Define price ceiling ii) Explain three effects na inis legal maximum price will have on the supply of orange juice in the market. (Draw a new hypothetical diagram to illustrate) Question 3 a. Calculate the cross-price elasticity of demand for porridge oats and milk sold in a supermarket if at the end of last period, the price of the porridge oats rose from $150 to $210 and the demand for milk sold, moved from 200 units sold to 180 units. State whether you think these two goods are complements or substitutes. b. Consider the case where the manager of KFC finds that the number of two-piece meals consumed per week fell from 1200 to 1000 boxes when the price of its meals was increased from $400 to $520. 1 i) Calculate the price elasticity of demand. Show your calculations. ii) If the KFC manager wishes to raise revenue, what is the appropriate action to take? (4 marks) c. Given that the demand function for banana chips may be written Qd-200-3p, where p is the price for banana chips, and the supply may be written as Qs=30+2p. Determine the equilibrium price and quantity Question 4 a. Describe five (5) factors that influence the market demand for a product such as personal computers. b. Explain three (3) characteristics of the planned economy. Give one example for each.