Question
QUESTION ONE [25] Fully discuss how the production possibility frontier demonstrates the basic economic problem of scarcity. QUESTION TWO [25] 2.1 Using demand and supply
QUESTION ONE [25]
Fully discuss how the production possibility frontier demonstrates the basic economic
problem of scarcity.
QUESTION TWO [25]
2.1 Using demand and supply analysis, explain the effect on the equilibrium price
and quantity of a good or service if the number of buyers in the market for this
good or service increases. (12)
2.2 Discuss the type of price control that a government would implement, if it wishes
to impose a national minimum wage. Include in your answer the economic effects
of such a price control. Motivate your answer with the aid of a diagram. (13)
QUESTION THREE [20]
Examine the impact on total revenue in terms of an elastic demand curve and inelastic
demand curve. Use diagrams to motivate your answer.
QUESTION FOUR [30]
Discuss in detail the macroeconomic circular flow diagram. Substantiate your answer
with the aid of a diagram.
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