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Economics, Accounting & Business: Post your doubts here!

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View attachment 9529

The answer is C. how come????
a maximum price can only be effective when it is below the equilibrium and the only way to do that is to either increase demand(shift right) or decrease supply (shift left)
advertising of bread will increase demand for wheat(derived demand concept) and shift demand right which will bring max. price below equilibrium.
 
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Que 3 - its a convex diagram (concave to the origin) just put some figures to the diagram and calculate the opportu.cost. You'll see that it increases for every extra unit you choose to produce.. Ans is D right?

Que 11 - i made the same mistake! Its again the maximum price. see initially the surplus is FGH. With the max price, there's a shortage and so the goods traded will only be GI. However, less price will increase the surplus by FGI. SO basically the fal in Qty has to be noted here i think.
qns 3- i tried placing values but it showed fall in opportunity cost! can you explain with values!
qns 11-ohh.....i get it thanks alot!
 
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yes yes.....i dont mind as long as my stupid doubts are cleared:p


Question#26
Apply the logic of Philips Curve it says when UNEMP reduces it Increase AD coz now more people are employed so more spending in an economy will result in rise in AD hence it will shift AD to right cause price level to rise and result in Inf.
*don not mix the Stagflation with this coz it says that INFLATION and unemp increase together here we are increasing price in philips curve we reducing UNEMPLOYEMENT.
Question#28
Supply for Currency(sfc) is related to supply.
See what among the 4options decreasing imports causing sfc to shift leftward....
Question#1
It means that when country is operating at PPC so what would be te OC of inreasing Capital investment in this situation.
PPC curve assumptions will help you here...
These are country produce only two goods Capital and Consumer goods..
So when country is operating at its frontier so increasing cap invstment mean more capital goods and relatively less consumer goods. Less consumer goods results in less consumption!!

Hope you have understood all 3questions!!
 
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a maximum price can only be effective when it is below the equilibrium and the only way to do that is to either increase demand(shift right) or decrease supply (shift left)
advertising of bread will increase demand for wheat(derived demand concept) and shift demand right which will bring max. price below equilibrium.

Thanks. it was a big help.
 
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View attachment 9529

The answer is C. how come????

To make Max price effective it shud be below the equilibrium here if you want to make OP effective you have to make somehow demand curve to shift rightward so that its new qui price becomes OP when u advertise a product it creates more demand amongst the consumer so bread is bake from wheat so ans is C
 
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Question#26
Apply the logic of Philips Curve it says when UNEMP reduces it Increase AD coz now more people are employed so more spending in an economy will result in rise in AD hence it will shift AD to right cause price level to rise and result in Inf.
*don not mix the Stagflation with this coz it says that INFLATION and unemp increase together here we are increasing price in philips curve we reducing UNEMPLOYEMENT.
Question#28
Supply for Currency(sfc) is related to supply.
See what among the 4options decreasing imports causing sfc to shift leftward....
Question#1
It means that when country is operating at PPC so what would be te OC of inreasing Capital investment in this situation.
PPC curve assumptions will help you here...
These are country produce only two goods Capital and Consumer goods..
So when country is operating at its frontier so increasing cap invstment mean more capital goods and relatively less consumer goods. Less consumer goods results in less consumption!!

Hope you have understood all 3questions!!
i get it!
thanks alot!;)
 
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