Correct Answer: B. long run

Explanation

The long run is a period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all costs, whereas, in the short run, firms are only able to influence prices through adjustments made to production levels

Correct Answer: C. 1

Explanation

The price elasticity of supply = % change in quantity supplied / % change in price. When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.

change in price = 10 - 15 = 5 change in quantity = 10 - 15 = 5 5

Correct Answer: C. average variable cost curves

Explanation

The long-run average cost (LRAC) curve shows the firm's lowest cost per unit at each level of output, assuming that all factors of production are variable. The LRAC curve assumes that the firm has chosen the optimal factor mix, as described in the previous section, for producing any level of output.

Correct Answer: B. trade fluctuations

Explanation

Cyclical unemployment is unemployment that results when the overall demand for goods and services in an economy cannot support full employment. Cyclical unemployment is when workers lose their jobs because of downturns in the business cycle.

Explanation

(a) Gross national income is the money value of all final goods and services produced in an economy in a given period plus net income from abroad.

(b)(i) Personal income is the amount earned by an individual for taking part in the production of goods and services either by him or his property e.g. wages, interest, rent and profit. Disposable income on the other hand is what individuals have to spend after personal income tax has been deducted from their personal income i.e. disposable income equals personal income less personal income tax.

(ii) Nominal income is the value of all goods and services produced expressed in terms of current money income received from their production. Real income on the other hand is nominal income expressed in terms of what it can buy. It is the nominal income deflated by the price level.

(c)(i) It is used for economic planning.

(ii) It is used as a basis for aids and grants from other countries.

(iii) It is useful in the calculation of per capita income.

(iv) It is used for international comparison of standard of living.

(v) It allows for sectoral comparison.

(vi) It allows for inter temporal comparison.

(vii) It influences foreign investments.

(viii) It is used as a basis for contribution to international organizations.

(ix) It is used to measure the level of economic performance i.e. whether the economy is growing or not.

Correct Answer: B. marketing co-operative societies

Explanation

(a)

Price elasticity of suppy = \(\frac{\Delta Q}{\Delta P}\) x \(\frac{P}{Q}\)

P = $20.00

Q = 500 gallons

\Delta Q = 500 - 400 = 100 gallons

\Delta P = $20.00 - $18.00 = $2.00

Es = \(\frac{100}{2}\) x \(\frac{20}{500}\)

Es = 2

(b) The supply is elastic. This is because the coefficient of price elasticity of supply is greater than one (Es > 1).

(c)(i)

(d)(i) Change in the price of related products.

(ii) Cost of production.

(iii) Change in technology.

(iv) Government policy e.g. tax or subsidy

(v) Expectation of producers.

(vi) Number of producers.

(viii) Natural disaster

Correct Answer: C. 12.5%

Correct Answer: C. inelastic demand

Explanation

Inelastic demand in economics is when people buy about the same amount whether the price drops or rises.

Correct Answer: B. The marginal utility is a always zero whenever the total utility reaches the maximum

Explanation

Marginal utility is the slope of the total utility curse. At maximum point slope of total utility is equal to zero. Therefore the marginal utility is also zero when total utility reaches its maximum level. Total utility is the sum of utility which consumer gains from consumption of certain goods and services.