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your consumption increases, so your spending and spending and spending. Had you not spent, you could have put your money in the bank or elsewhere and earned an interest on it. Buh u dint, and chose to spend. So the interests become the O/C
Also, almost all normative statements have words like "should" "deserve" "best" its just basically opinions.
isn't the opp cost 2.5Am so sorry i dont have a way of showing you. :/
A curve like that, has increasing opportunity cost. For eg, lets say Country A is producing is guns and butter.
I'l sorta give you the guidelines, see if u can put it in a diagram? I know its gonna get annoying. buh its worth it
Assume Y axis as butter and the other guns. (Max of butter 300 and Max of guns 200)
Assume the current level of production is 250 butter and 100 guns.
Then assume the country decides to produce more of guns, and increases production to 180, this will reduce production of butter to 200. Find the O/C of this decision. It = 0.625
Then again assume. the economy chooses to produce more of guns and increases to the max level, 200. Now the O/C will be 10.
Now do you see that the O/C has increased from 0.625 to 10??
I hope i dint end up confusing you. Buh am sorry, this was the only way i could assist you :/
Hope i did some help?!
(i made up the diagram when typing this, and it worked. Just try it
Words like 'deserve', 'should', 'ought' or the likes of these when used in a statement, know that those statements are normative; the rest, positive.
and welfare is given as a key word too for normative statements!
Thank you soo much!!!
hey!Hello, I am having problems in some of the Eco MCQs of A2. Will be very glad if anyone helps me out here.
I am posting some of the mcqs here. Try to help me out in all of them or at least the ones you can solve.
Oct/Nov paper 31 2010=
18 According to monetarist theory, what will be the short-run and the long-run effect of an
unexpected increase in the money supply on the real wage level?
short-run long-run
A decrease increase
B decrease unchanged
C unchanged increase
D unchanged unchanged
why is the answer B here????
20 In a closed economy with no government
the full employment level of income = $400 billion
and the equilibrium level of income = $380 billion.
If the deflationary gap is $4 billion, what is the marginal propensity to consume?
A 1/5
B 1/4
C 3/4
D 4/5
Why is the answer D here??
22 An increase in the money supply leads to a fall in interest rates. What else will decrease as a
result of these changes?
A the desire to hold idle money balances
B the price of equities
C the price of government bonds
D the velocity of circulation of money
Why is the answer D here??
24 Which feature of the Indian economy could explain why the purchasing power parity exchange
rate of the Rupee is much higher than its market exchange rate?
A high levels of duty on imported goods
B high levels of rural unemployment
C the relatively low price of goods not traded internationally
D the relatively low rate of inflation
Why is the answer C here??
Oct/Nov 09 paper 32 =
Q9. (Sorry couldn't post the question here as it contained a diagram)
Why is the answer D here?
Q15. (Sorry couldn't post the question here as it contained a diagram)
Why is the answer C here?
Q20. (Sorry couldn't post the question here as it contained a diagram)
Why is the answer C here??
Thank you very much. Cheers!
Its not 2.5
i get it now
it cant be zero for nuts as a change in income has caused a change in price, had it stayed zero then it would be zero. ill just check the other question
yah
in A the exports and imports both have an inelastic ped. there is a depreciation in currency of country x, making their imports more expensive than exports, since inelastic, demand of exports will fall greater than demand for imports, hence BOP defecit. option D is the exact opposite as the ped is elastic in that case
i meant c*
Isn't a PED of 1.5 considered elastic?
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