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Vraag 1 Verslag
The problem of "how to produce" in any economy is solved by
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In any economy, the problem of "how to produce" is essentially about deciding the best way to combine resources to produce goods and services. This challenge can be effectively addressed by adopting the least cost method of production.
Here’s why:
In summary, while other methods and managerial skills are important, addressing how to produce in the most efficient and effective way often boils down to using the least cost method of production, thereby ensuring optimal resource use and economic stability.
Vraag 2 Verslag
The following will occur when maximum price is fixed below the free market price EXCEPT that
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When a maximum price is fixed below the free market price, it can lead to several outcomes due to the restrictions placed on how high a price can go. Here's a breakdown of what typically happens:
1. **Encouragement of Black Market:** When the price ceiling is lower than what would naturally occur, some sellers may not be willing to sell at the lower price. This may encourage them to sell illegally at higher prices, leading to the emergence of a **black market**.
2. **Excess Demand:** A lower price means that more people can afford the product. Therefore, demand for the product increases, but because producers are not willing to supply more at that low price (since they make less profit), there isn't enough product to meet demand. This creates **excess demand**. People want more of the product than is available.
3. **Excess Supply:** This situation is not a consequence of setting a maximum price below the free market price. **Excess supply** happens when the price is too high, resulting in goods remaining unsold as consumers are not willing to buy at that price. But since in this scenario, the price is kept low, the opposite happens: a shortage, not a surplus.
4. **Rationing of Commodities:** To manage the excess demand and ensure fair distribution since there's a shortage, the government or sellers may need to introduce **rationing**. This means setting limits on how much each individual can purchase to prevent the faster depletion of available goods.
In summary, the statement about **excess supply** is the one that would not occur when a maximum price is fixed below the free market level. Instead, you'll have excess demand. This discrepancy is because the artificially low price discourages producers from supplying more of the good.
Vraag 3 Verslag
The diagram belwo, shows the relationship between
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The relationship shown in the diagram is most likely related to the **wage rate and unemployment.** Let me explain this relationship clearly:
The **wage rate** refers to the payment workers receive for their labor, typically expressed on an hourly, daily, or yearly basis. The **unemployment rate** is the percentage of the labor force that is jobless and actively looking for work.
When the **wage rate** offered in the market is above the equilibrium wage (where the supply of labor equals the demand for labor), firms may choose to hire fewer workers as it becomes more expensive to employ labor. This can lead to an **increase in unemployment**. Conversely, if the wage rate is lower, firms are more likely to hire additional workers, possibly decreasing unemployment.
Understanding this relationship is crucial in comprehending how wage policies can influence employment levels. Wage increases that are not aligned with productivity may result in higher costs for employers, potentially resulting in a reduction of jobs available, hence increasing unemployment. Therefore, there is a delicate balance between setting wage levels and maintaining employment levels in the economy.
Vraag 4 Verslag
Economic problem arises as a result of
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The **economic problem** arises due to the fundamental concept of **scarcity**. In simple terms, scarcity means that the resources available to us are **limited**, while our desires and needs are **unlimited**. This situation forces us to make decisions about how best to allocate our resources efficiently.
Because of scarcity, every choice we make involves a **trade-off**. For instance, if you choose to spend your time studying economics instead of mathematics, you sacrifice the benefits you would have gained from studying mathematics. The concept associated with this scenario is called **opportunity cost**, which is essentially the value of the next best alternative forgone when making a decision.
Furthermore, scarcity leads to the necessity of **choice**. Individuals, businesses, and governments must decide what to produce, how to produce, and for whom to produce. These choices are influenced by the limited resources and the alternatives available.
While **money cost** is often considered in decisions, it is not the root cause of the economic problem. It is a **monetary representation of value** and is used as a tool to navigate scarcity and opportunity cost.
In essence, the **economic problem exists** because we have to make choices about how to use our scarce resources most effectively, and every choice involves an opportunity cost. This continual need to prioritize options is at the very heart of economics.
Vraag 5 Verslag
Producers operating in a free market economy are more efficient as a result of
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In a free market economy, multiple producers are allowed to enter the market and compete with each other. This competition creates incentives for producers to become more efficient in order to gain a competitive advantage. When producers compete, they strive to offer better quality products, lower prices, and improved customer service. To achieve these goals, they need to find ways to reduce costs, increase productivity, and innovate. The pressure of competition encourages producers to constantly improve their efficiency to attract customers and maximize profits
Vraag 6 Verslag
A producer who can only influence the price of his product but canNOT determine the quantity to be sold is referred to
as
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A producer who can influence the price of a product but cannot determine the quantity to be sold is best described as a monopolist.
Here's an explanation:
In a monopoly, there is only one producer or seller who dominates the entire market for a particular product or service. This producer has the power to influence the price because they are the sole supplier, and there are no close substitutes. However, while they can set the price based on their objectives, the actual quantity sold is determined by the market demand at that specific price.
The other terms are different:
Vraag 7 Verslag
The following are problems of development planning in Nigeria EXCEPT
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Nigeria, like many developing countries, faces several challenges in its development planning. These include issues such as inadequate capital, which limits the ability to fund critical development projects and infrastructure, thus hindering economic growth. Another significant challenge is the inadequate statistical data, which affects the ability to make informed, evidence-based policy decisions. Without reliable data, it's difficult to plan effectively and measure progress.
Poor implementation of economic planning is also a notable problem, as even the best-laid plans cannot yield results if not properly executed. This might be due to bureaucratic inefficiencies, corruption, or lack of capacity.
However, the statement under-population is not a commonly recognized problem in Nigeria. In fact, Nigeria is known for having a large and rapidly growing population, which sometimes poses its own challenges in terms of resource management and service provision. Therefore, the issue of under-population can be seen as an exception to the typical problems of development planning in Nigeria.
Vraag 8 Verslag
The following are type of business organization EXCEPT
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In the context of business organizations, the term that stands out as not fitting among the others is **Entrepreneurship**.
To understand why, let's briefly define each term:
Thus, the odd one out is Entrepreneurship, because it describes the activity of establishing and managing a business rather than being a structured form of business organization like the others mentioned.
Vraag 9 Verslag
When combination of two goods which a consumer derive equal satisfaction is plotted on a graph, the graph is known as
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The combination of two goods which a consumer derives equal satisfaction from is plotted on a graph known as an indifference curve. This graph represents all the different combinations of two goods that provide the consumer with the same level of utility or satisfaction.
For instance, if a consumer is equally happy with either 3 bananas and 2 apples or 2 bananas and 3 apples, both points will lie on the same indifference curve.
The reason it's called an indifference curve is because the consumer is indifferent between any two points on this curve, meaning they have no preference for one combination over the other since both provide the same level of satisfaction.
Unlike a demand curve which shows the quantity of a good that consumers are willing and able to purchase at various prices, the indifference curve focuses solely on the level of satisfaction from different combinations of goods, without considering their prices directly. It is an essential concept in the study of consumer behavior and helps understand how consumers make choices between different goods.
Vraag 10 Verslag
The diagram below represent
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The diagram you are referring to represents the Circular Flow of Income. This is a crucial concept in economics that demonstrates how money moves within an economy between different sectors. Let me explain it further in a simple and clear manner.
The Circular Flow of Income exhibits the interactions and transactions that occur between two major groups in an economy: the households and the firms. It is important to note that:
The flow of economic resources and money can be explained in two key types:
In an expanded model of the circular flow, other components may be included, such as the government, financial sector, and foreign markets, which illustrate additional flows such as taxes, government spending, savings, investments, and exports/imports.
Overall, the Circular Flow of Income provides a fundamental understanding of how economic activity is interconnected and how different sectors interact with one another in a continuous cycle.
Vraag 11 Verslag
When an economy is having a balance of payment surplus the best alternative opened to it is to
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When an economy is experiencing a balance of payments surplus, it means that the country is exporting more goods, services, and capital than it is importing. Essentially, there is more money flowing into the country than out of it. In such situations, one of the most viable actions to take is to increase its foreign reserves.
Here's why increasing foreign reserves is often the best option:
Promoting imports, while it can help reduce the surplus by encouraging money to flow out of the country, may not always be the best course of action and depends on the country's economic goals and import needs. Borrowing from abroad is generally not necessary when the country has a surplus. Devaluing the currency is certainly not favorable in the context of a surplus as it can create inflationary pressures and reduce purchasing power internationally.
Vraag 12 Verslag
Which of the following is NOT a function of the IMF?
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The International Monetary Fund (IMF) is an international organization that primarily focuses on ensuring the stability of the international monetary system. Here are some of its core functions:
The statement that is NOT a function of the IMF is "assisting member countries in printing and issuing their currency." The IMF does not assist countries in printing or issuing their currency. This activity is typically managed by each country's own central bank or monetary authority. Thus, this function does not fall under the responsibilities of the IMF.
Vraag 13 Verslag
Economics problems arise in all societies because
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Economics problems arise in all societies primarily because resources are not in adequate supply. This is known as the fundamental economic problem of scarcity. In every society, there are limited resources but unlimited wants and needs. These resources include things like land, labor, and capital, which are necessary for producing goods and services. Since we do not have enough of these resources to satisfy everyone's desires, we face choices about how to allocate them efficiently.
The issue of scarcity leads to other economic problems such as deciding what to produce, how to produce it, and for whom it should be produced. These decisions are made by assessing opportunity costs and considering how to make the best possible use of the limited resources available.
While factors such as lack of proper planning or mismanagement by leaders can exacerbate economic problems, they are not the root cause. The core issue remains the limited availability of resources, compelling societies to prioritize and decide how best to meet the needs of their population.
Vraag 14 Verslag
In the long-run, a firm must shut down if its average revenue is
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In the long-run, a firm must shut down if its average revenue is less than its average variable cost. This is because the firm is unable to cover even its variable costs, which are the costs it incurs when it produces any output at all. Let me explain further:
To put it simply, if average revenue is less than average variable cost, the firm can't sustain itself in the long-run, and shutting down is a rational decision.
Vraag 15 Verslag
An economy in which decision of what to produce is taken partly by private individuals and state is referred to as Economy.
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An economy in which decisions about what to produce are taken partly by private individuals and partly by the state is referred to as a Mixed Economy.
In a Mixed Economy, there is a combination of both private sector and public sector involvement. This structure allows private individuals to own businesses and make decisions about what to produce based on market demands and profitability. At the same time, the government also plays a significant role in economic decision-making, often by regulating certain industries or directly providing goods and services. The balance between these two forces aims to combine the benefits of both market dynamism and government oversight.
Here's a brief explanation of other economic systems to provide contrast:
In summary, a Mixed Economy represents a blend that includes elements of both market-driven and government-directed decisions, which sets it apart from other economic types.
Vraag 16 Verslag
The following can be used to improve a country's balance of payment EXCEPT
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The balance of payments is a record of all financial transactions made between consumers, businesses, and the government in one country with others. It includes trade in goods and services, investments, and money transfers. To improve a country's balance of payments, particularly the trade balance, countries may implement certain policies.
Anti-dumping policies are used to prevent foreign companies from selling goods at a price lower than their market value to gain an unfair advantage. By implementing anti-dumping policies, a country can protect its domestic industries from unfair competition, which can help improve the balance of payments by reducing imports or encouraging domestic consumption.
Granting subsidies to export producers can help improve the balance of payments by making domestic products cheaper and more competitive in international markets. By lowering production costs, subsidies can help increase exports, leading to an improvement in the balance of payments.
Increasing import duties is another way to improve the balance of payments. By imposing higher taxes on imported goods, a country can discourage imports and encourage consumers to purchase domestically produced goods. This can improve the trade balance by reducing the outflow of money used to purchase foreign products.
On the other hand, decreasing taxation on personal income doesn't directly affect the balance of payments. Reducing personal income tax may increase disposable income for consumers, which could lead to more consumption. However, this increased consumption might not necessarily focus on domestic goods, and could instead lead to higher imports. Therefore, among the options listed, decreasing taxation on personal income is the one least likely to directly improve a country's balance of payments.
Vraag 17 Verslag
In income determination theory, acceleration principles shows that
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In income determination theory, the acceleration principle suggests that investment is the primary driver or cause, whil income is the resulting effect. The acceleration principle states that changes in investment levels lead to amplified or accelerated changes in income.
The acceleration principle posits that changes in investment levels have a multiplier effect on income. When investment increases, it leads to increased production, employment, and income generation.
Vraag 18 Verslag
If the price of commodity X rises and consumers shift to commodity Y, then commodities X and Y are
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If the price of commodity X increases and consumers start purchasing commodity Y instead, then commodities X and Y are considered substitutes. Substitutes are goods that can be used in place of one another; when the price of one goes up, consumers naturally shift their demand to the other because it serves a similar function or purpose.
Consider an example: if the price of coffee goes up, people might start drinking tea instead if tea serves as a similar alternative for their morning beverage needs. In this scenario, coffee and tea are substitutes. Therefore, the relationship between these goods is defined by consumers' ability to consider one in place of the other based on price.
In summary, when consumers replace their consumption of one good with another due to price change, the goods in question are substitutes.
Vraag 19 Verslag
Which of the following NOT among the objectives of OPEC?
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When analyzing the objectives of OPEC (Organization of the Petroleum Exporting Countries), it is important to look at the core goals that this organization typically aligns with:
1. To stabilize the price of oil in the world market: This is indeed one of the primary objectives of OPEC. By coordinating the oil production levels among its members, OPEC strives to maintain oil price stability in the global market.
2. To stabilize the revenue from oil to producing countries: Another key objective of OPEC includes ensuring consistent and fair revenue for its oil-producing member countries. By influencing oil prices and production levels, OPEC helps in maintaining stable revenues for these nations.
3. To make sure that oil flows to all the consuming countries: Ensuring the continuous supply of oil to consuming countries is a goal aligned with OPEC's efforts to balance supply and demand for economic and energy stability worldwide.
4. To establish petroleum refineries in all member states: This is NOT among the objectives of OPEC. OPEC does not focus specifically on establishing petroleum refineries in all its member states. The organization's primary focus is on coordinating and unifying the petroleum policies among its member countries, not on the physical establishment of refineries.
Vraag 20 Verslag
When the total product starts falling, then the marginal product is
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In the context of production, the Total Product (TP) refers to the total quantity of output produced by a firm. The Marginal Product (MP) is the additional output obtained by employing one more unit of a specific input, while keeping all other inputs constant.
When the Total Product starts to fall, it indicates that each additional unit of input is contributing less and less to the total output, to the extent that the output is actually decreasing. This means that any added input is no longer producing additional output but instead reducing it. Therefore, the Marginal Product in this situation is actually negative.
Here is why:
Vraag 21 Verslag
Which of the following is the correct order in the chain of distribution?
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The correct order in the chain of distribution is: Producer → Wholesaler → Retailer → Consumer.
Let's take a closer look at each stage in this sequence:
Producer: This is the first stage where the initial product is manufactured or created. The producer could be a manufacturer or a farmer, or anyone who creates goods or services to be sold.
Wholesaler: After the producer creates the goods, they typically sell them in large quantities to a wholesaler. The wholesaler buys in bulk and often offers products at a lower price, allowing them to distribute to various retailers.
Retailer: The wholesaler then sells these products to retailers. Retailers have stores or online platforms where consumers can purchase products in smaller quantities. Retailers make these products accessible to the general public.
Consumer: Finally, the consumer is the person or entity that purchases and uses the product. This is the last step in the distribution chain, where the goods reach their intended end-users.
This sequence ensures that goods move efficiently from creation to the hands of consumers through different intermediaries, making the distribution process systematic and effective.
Vraag 22 Verslag
Persistent fall In the general price level is known as
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A persistent fall in the general price level is known as deflation.
To understand this better, let's break it down:
Hence, when we say "persistent fall in the general price level," we are accurately describing deflation.
Vraag 23 Verslag
Which of the following is NOT an objective of Economic planning?
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Economic planning is an important policy tool used by governments to coordinate their efforts in improving the nation's economy. Let's look at the objectives:
Equitable allocation of resources: This is indeed an objective of economic planning. It ensures that resources are distributed evenly across different sectors and regions to promote balanced development and reduce regional disparities.
Achieving economic growth: Another key objective of economic planning is to spur economic growth. This involves increasing the capacity of the economy to produce goods and services, enhancing the standard of living, and elevating the overall wealth of the nation.
Creating employment: Economic planning aims to create jobs for the population. By fostering industries and fostering investment, economic planning attempts to reduce unemployment rates and provide more job opportunities.
Widening the income gap: This is NOT an objective of economic planning. Economic plans generally aim to reduce, not widen, the income gap between different segments of society. A widening income gap can lead to increased poverty and social unrest, which are contrary to the goals of economic planning focused on promoting equality and social harmony.
Vraag 24 Verslag
A major characteristics of a firm operating at a long-run equilibrium position is that
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In the long-run equilibrium position for a firm, **all costs are variable**. This is because the long-run is a period sufficiently long for firms to adjust all factors of production. They can expand or reduce their capacity, acquire new technology, or even enter and exit industries depending on market conditions.
Unlike in the short-run where some factors (like buildings and machinery) are **fixed** because they cannot be changed immediately, in the long-run, firms have the flexibility to alter all their inputs. This means that firms can choose the optimal scale of operation where the average cost of production is minimized, leading to a position where profits are maximized if the market structure allows.
So, in summary: In the long-run, a firm operates where **all costs are variable**, allowing complete adjustment to maximize efficiency and competitive position in the market.
Vraag 25 Verslag
Which of the following is NOT a feature of capitalism?
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In a capitalist economic system, several features define its characteristics. To understand which of the given options is NOT a feature of capitalism, let's examine each one:
Free Enterprise: This is a fundamental aspect of capitalism. It refers to the freedom of businesses to operate competitively for profit with minimal government intervention. Under free enterprise, individuals and businesses have the right to sell goods and services, decide on investments, and set prices.
Private Ownership of Property: Another core feature of capitalism is the ownership of property by individuals or corporations rather than by the government. In this system, individuals have the right to own assets, resources, and production facilities. They can use, rent, or sell property as they see fit.
Competition: Competition is a driving force in capitalism. It encourages businesses to improve their products and services, enhance efficiency, lower prices, and innovate. Healthy competition is believed to lead to better choices and quality for consumers.
Detailed Economic Planning: This is NOT a feature of capitalism. Detailed economic planning is more characteristic of socialist or centrally planned economies where government agencies set production targets, control resources, and address distribution centrally. Capitalism relies more on market forces and price mechanisms to guide economic decisions rather than detailed and centralized planning.
Therefore, detailed economic planning is the correct answer as it is NOT a feature of capitalism.
Vraag 26 Verslag
The formular (N + 1)/2 is used to determine the
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The formula (N + 1)/2 is used to determine the median position in a dataset that is arranged in ascending or descending order. Understanding how to find the median is important because the median is a measure of central tendency that represents the middle value of a dataset. Here's a clear explanation of this concept:
When you have a set of numbers, the median is the number that falls in the middle when the numbers are arranged in either increasing or decreasing order. To find this middle value, you can use the formula (N + 1)/2, where N represents the total number of observations in the dataset.
For example, let's say you have a dataset with an odd number of observations: 3, 5, 7. Here, N is 3, so you apply the formula:
Median position = (3 + 1)/2 = 2
This calculation indicates that the second number in this ordered list is the median, which is 5.
If you have an even number of observations, such as 2, 4, 6, 8, you would calculate the median position as follows:
Median position = (4 + 1)/2 = 2.5
In this case, because 2.5 isn't an integer, the median is the average of the second and third numbers, which are 4 and 6. Therefore, the median is (4 + 6)/2 = 5.
In summary, the formula (N + 1)/2 is used to identify the position of the median in a list of numbers that are ordered, allowing us to understand where the middle point of the data lies.
Vraag 27 Verslag
If the marginal utility of commodity is equal to its price, then
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To understand the concept of marginal utility and price, let's delve into a simple explanation. Marginal utility refers to the additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service. Meanwhile, the price of a commodity is what the consumer pays to acquire that good or service.
In economic terms, a consumer is said to be in equilibrium when they have allocated their resources in such a way that they get the most satisfaction or utility from their consumption. The consumer equilibrium condition is achieved when the marginal utility per unit of expenditure is the same for all commodities.
Therefore, when the marginal utility of a commodity is equal to its price, it means the consumer is maximizing their satisfaction with the resources available. The consumer has no incentive to change the consumption bundle because they are already getting the highest possible satisfaction. In other words, the consumer is getting just as much utility from the last unit of the good as it costs. Consequently, the consumer is in equilibrium.
Thus, the correct explanation is: The consumer is in equilibrium.
Vraag 28 Verslag
The following are rewards for factors of production EXCEPT
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Factors of production are the inputs used to produce goods and services in an economy. The main factors of production include land, labor, capital, and entrepreneurship. Each of these factors receives a specific reward or return:
The term subsidy is generally not a reward for factors of production. A subsidy is a financial assistance granted by the government to individuals or businesses to support activities, promote economic growth, or reduce the cost of certain goods and services. It is not directly linked to any of the classical factors of production.
In conclusion, while profit, rent, and interest are returns directly associated with factors of production, a subsidy is not. It serves a different purpose in economic policy.
Vraag 29 Verslag
The bank established to finances project aimed at promoting economic and social development within the African continent is
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The bank that is primarily dedicated to financing projects aimed at promoting economic and social development within the African continent is the African Development Bank (AfDB).
The African Development Bank (AfDB) was established in 1964 with the main objective to reduce poverty, improve living conditions, and promote economic and social development in African countries. It achieves these goals by providing loans and grants for a variety of development projects and programs across the continent. These projects cover various sectors including infrastructure, education, healthcare, agriculture, and energy.
Unlike purely commercial banks, the AfDB is focused on development projects that may not always have immediate financial returns but are crucial for the sustainable growth and development of African nations. The bank works together with member countries and international partners to mobilize resources and expertise needed to tackle the continent's challenges, often adopting innovative financing solutions tailored to the unique needs of the African context.
Vraag 30 Verslag
If two bags of rice were sold for #1,250 a month ago and two weeks later, the same amount was used to procure one bag. This simply means that the value of money is
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In this scenario, the price of rice has increased relative to the amount of money (N1,250) that could be used to purchase it. Initially, N1,250 could buy two bags of rice, but after two weeks, the same amount can only buy one bag.
This decrease in purchasing power demonstrates that the value of money has declined. In other words, the same amount of money can now buy fewer goods or services than before. This situation is often referred to as inflation, where the general price level of goods and services rises over time, reducing the purchasing power of money.
Vraag 31 Verslag
A price floor is usually fixed
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A price floor is a **minimum price** set by the government for a particular good or service. It is designed to ensure that the price is not too low, often supporting producers by maintaining their income at a viable level.
For a price floor to be effective, it is usually fixed **above the equilibrium price.** Here's why:
Therefore, a price floor is usually fixed **above the equilibrium and causes surpluses.** This allows it to serve its purpose of protecting producer revenues while potentially benefiting certain industry stakeholders.
Vraag 32 Verslag
From the diagram below, moving from point A to B and from B to c is due to
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Opportunity cost is a key concept in economics that refers to the value of the next best alternative forgone when making a choice. It plays a significant role in determining the downward shift in the production possibilities curve (PPC).
The PPC represents the different combinations of two goods or services that an economy can produce given its limited resources and technology. It illustrates the trade-offs that occur when resources are allocated between the production o different goods.
When there is a downward shift or inward shift in the PPC, it indicates a decrease in the economy's productive capacity. This shift can be influenced by several factors, including changes in resource availability, technology, or the efficiency of resource allocation. However, opportunity cost can help explain how these factors lead to a downward shift.
Vraag 33 Verslag
When an increase in the price of a commodity lead to a fall In the demand for another, the demand for the two commodities are said to be
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Competitive demand refers to a situation where two or more goods are seen as substitutes for each other. When the pric of one commodity increases, consumers tend to shift their demand towards the substitute commodity, resulting in a decrease in the demand for the original commodity.
For example, if the price of coffee increases significantly, some consumers may choose to switch to tea as a substitute. A: a result, the demand for coffee decreases while the demand for tea increases.
Vraag 34 Verslag
Which of the following is a disadvantage of localization of industries?
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Localization of industries, also known as industrial clustering or agglomeration, refers to the concentration of similar industries or related businesses in a specific geographic area. While there are various advantages associated with localization, such as promoting knowledge spillovers, fostering collaboration, and enhancing economies of scale, it can also have disadvantages.
One of the disadvantages is the creation of structural unemployment. When industries concentrate in a particular region job opportunities may become limited to that specific area. As a result, workers in other regions or industries may face challenges in finding employment, leading to structural unemployment. This can be particularly problematic if the localized industry experiences a decline or faces disruptions, resulting in job losses for a significant portion of the workforce.
Vraag 35 Verslag
At the equilibrium price,
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The equilibrium price in economics is a fundamental concept where the market operates most efficiently. To understand it fully, consider the following explanation:
When demand equates supply, it indicates the price at which the quantity of goods consumers are willing to buy (demand) is exactly equal to the quantity of goods producers are willing to sell (supply). This is the point where the market reaches equilibrium. At this price, there is no excess supply or demand, meaning that resources are being used most effectively, and there is no pressure on the price to change.
In contrast:
Thus, at equilibrium price, demand equates supply, ensuring the market operates smoothly without surplus or shortage.
Vraag 36 Verslag
The use of tax and expenditure policy to regulate the economy is known as
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The use of tax and expenditure policy to regulate the economy is known as fiscal policy.
Fiscal policy refers to the government's use of its spending levels and tax rates to influence a nation's economy. It is primarily the responsibility of the government to adjust its spending and tax rates to either promote economic growth or control inflation. By doing so, the government aims to achieve macroeconomic objectives such as controlling inflation, reducing unemployment, and achieving economic growth.
There are two main types of fiscal policy:
In summary, fiscal policy is crucial because it directly impacts the economy by influencing the level of aggregate demand through changes in government spending and taxation.
Vraag 37 Verslag
Under perfect competition, a profit maximizing firm will hire labour up to the point where the last unit of labor adds
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Under perfect competition, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor (MRP) is equal to the wage rate. MRP represents the additional revenue generated by adding one more unit of labor.
Since the firm aims to maximize profits, it will continue hiring labor until the MRP is greater than or equal to the wage rate. At this point, the last unit of labor hired contributes more to total revenue than to total cost, resulting in increased profits for the firm.
Vraag 38 Verslag
The following determine the level of consumption EXCEPT
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The level of consumption generally refers to the amount of goods and services that households are willing and able to purchase. This can be influenced by several factors:
Level of Income: The more income people earn, the more they can spend on goods and services, which directly affects consumption levels. With higher income, households typically increase their consumption.
The Rate of Taxes Paid: Taxes directly impact disposable income, which is the income available after tax deductions. Higher taxes reduce disposable income and may lead to lower consumption, while lower taxes increase disposable income and can potentially boost consumption.
Savings: When households allocate a portion of their income to savings, this reduces the immediate level of consumption. Therefore, high levels of savings can indicate lower levels of consumption.
The Political Climate: Although the political climate can affect the economy in various ways, it is generally not a direct and immediate determinant of consumption levels. The political climate can influence factors like economic stability and government policies, but it is not a direct factor in determining how much households consume.
Based on these explanations, the factor that determines the level of consumption the least is the political climate, because its effects are indirect and less immediate compared to the direct effects of income, taxes, and savings on consumption.
Vraag 39 Verslag
The satisfaction derived from the consumption of a commodity is referred to as
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The satisfaction derived from the consumption of a commodity is referred to as utility. To explain this concept further, let's break it down:
Utility is an economic term that describes the pleasure, happiness, or satisfaction a consumer gets from consuming goods and services.
Here’s why it is the correct term:
In summary, whenever we talk about the satisfaction from using or consuming goods, we are discussing the concept of utility.
Vraag 40 Verslag
What add funds to the circular flow?
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The concept of the circular flow of income represents how money moves within an economy among consumers, businesses, and various markets. In this circular flow, three key elements can either add to or reduce the flow of funds: **leakages** and **injections**.
Leakages are the flows of money that exit the circular flow. They reduce the amount of money that circulates within the economy. Common leakages include savings, taxes, and imports. For instance, when individuals save money instead of spending it, that money is not used to purchase goods or services, thus exiting the circular flow.
Injections, on the other hand, are the activities or financial inflows that add funds to the circular flow of income, ensuring continued economic activity. They increase the total amount of money circulating in the economy. These include investment, government spending, and exports.
The expenditure approach is a method for calculating a nation's Gross Domestic Product (GDP) by considering the total expenditure on the nation's final output of goods and services in a year. While this approach helps to measure the size of the economy, it is not directly responsible for adding funds to the circular flow. Instead, it relies on the activities of consumption, investment, government spending, and net exports.
In conclusion, it is the concept of injection that directly adds funds to the circular flow, stimulating economic activities and growth by multiplying the effects of initial spending through the economy.
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