Question

Figure: The Demand and Supply of Wheat Price (per bushel) D 0 2 4 6 8 10 12 Quantity of wheat (thousands of bushels per period) Reference: Ref 3-6 (Figure: The Demand and Supply of Wheat) Look at the figure The Demand and Supply of Wheat. If a price of $10 temporarily exists in this market, a _ _of bushels will result. shortage: 10,000 shortage; 8,000 surplus; 8,000 surplus; 4,000

Answer 1

1 The demand and supply of wheat (Figue! The Demand and supply of wheat) Look at the time. The demand and supply of wheat. et a price of $10 temporalily exists in this fuarket, then from the a tigre we can see that at Puice of 410, Quantity demanded is 2 or 2 000 bushels and quantity supplied is 10 or loooo bushels. Ance pure of $$10, there enests ences supply or smples of wheat = c 1000 - 2000) = 8000 bu Hace. ét a price of $10 tontoration temporarily exists in this market, a suples of 8000 bushels will result. Look at the tique : Wine and wheat. If this economy e producing 12 tons of wheat and 9000 bottles of wine, we know that any point on the production possibility cave is pareto efficient. As combination of 12 tons of wheat and 9000 bolt las of wine is represented by point D Which is on the production possibility emue, hence resomas are fully utilised. Hince the answn will be ? is using its resonces efficiently. Scanned with CamScanner

Question 3a Which of the following is TRUE of a normal good? for normal goods, income elasticity of demand is greater then Zno which means that when in come in measu I demand for that good will increase. Hunce the answn will be When in come û creasu , the boo demand for the good increases. Which of the following factor would result solely in a movement along the demand anuc for a particular good. Answers we know that as price is of the particular good is an endogenous variable, which means Price is detrmined on the basis of the model, hence a cloge in price of the good will result in a movement along the demand amuca ince answn will be! a change in the price of that good. Scanned with CamScanner