QUESTION 1

1. Economists' advice governments using two main types of economic statements. Define and explain how these statements differ in their use. In answer provide an example of each type of statement. 2 Marks

1. Can causation exist without correlation? Define the concepts and explain if agree with the question. 2 Marks

1. Define and apply opportunity cost to a choice you made recently. 1 Mark

QUESTION 2

1. Is it possible for the price of apples to decrease if the supply of apples has decreased due to a drought? Explain with the help of demand and supply graphs. 2 Marks

1. Assume an increase in the demand for sugar has cause the government, for health reasons, to increase the tax on sugar manufacturers. Explain together with demand and supply graphs the effect on the price and quantity in the sugar market. Hint: address all possibilities in answer. 3 Marks

QUESTION 3

Food prices in many countries are rising. Explain with graphs, three situations where food prices can rise because of changes in demand and /or supply. Use a separate graph for each situation. 3 Marks

QUESTION 4

1. Assume an increase in price from $3.15 to $3.55 leads to a fall in quantity demanded from 25 to 12 units. Calculate and interpret the value of the price elasticity of demand. 1.5 Marks

1. Applying your understanding of price elasticity of demand, define and explain in detail how different elasticity values will impact pricing policies. 2.5 Marks

QUESTION 5

1. Scotland legislated a price floor on alcoholic beverages in 2018 imposing a minimum price to target cheap but strong alcoholic beverages. Use demand and supply analysis and graphs, explain how a price floor works. In answer discuss two negative impacts of such a policy. 2 Marks

1. Provide an example of a price floor that exists in Australia. 1 Mark