Ass1Answers

Ass1Answers - UNIVERSITY OF ESSEX DEPARTMENT OF ECONOMICS...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 UNIVERSITY OF ESSEX SESSION 2011/2012 DEPARTMENT OF ECONOMICS AUTUMN TERM TIM HATTON EC111 – INTRODUCTION TO ECONOMICS ASSIGNMENT 1 This assignment is to be handed in to Room 5B.209 BEFORE 12.00 NOON on MONDAY 28 th November, 2011 , you will receive an electronic receipt. You should NOT hand in assignments to your class teacher. Please note that the University has a zero tolerance policy for late submission of coursework. Therefore all assignments submitted after the deadline will receive a mark of zero. See page 67 of the Undergraduate Economics Handbook for details. Please make sure that your NAME and that of your CLASS TEACHER are printed clearly on the front page of your assignment. This assignment is divided into two sections. Each is worth 50% of the marks. Write your answers in the spaces provided; do not include any other sheets. You should answer all questions. No marks will be award for those parts of answers which exceed the space limits. Please write your answers CLEARLY . CLASS TEACHER’S NAME: . ................................................................................. (Block capitals only) YOUR NAME: . ......................................................................................................... (Block capitals only)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
SECTION A (5 marks per question) State whether each statement is TRUE, FALSE or UNCERTAIN, giving a brief explanation in the space provided. Use diagrams where appropriate. Your marks will depend entirely on the quality of this explanation: e.g., even if it is correct, putting “TRUE” will get no marks unless you explain your answer. 1) If a country has a concave Production Possibility Frontier, for each good the opportunity cost falls as more of that good is produced. The diagram shows a concave PPF. The opportunity cost of a good is the amount of the other good that must be given up to obtain another unit. For good X this is the slope of a line tangent to the PPF. At Q X1 the slope (a tangent to the PPF at A) is smaller than at Q X1 (the tangent at B). Thus the opportunity cost of X increases as more X is produced. FALSE. [2 marks for a diagram of the PPF; 2 marks for some understanding of opportunity cost; 1 mark for showing that the opportunity cost declines along the PPF, a bonus for anyone who recognises that the same is true for Y] 2) The government introduces a per-unit tax on a good and the price paid by consumers increases by the full amount of the tax. The demand curve must be completely inelastic. P X is the price facing consumers, so the introduction of a tax, T, is equivalent to shifting up the supply curve. If demand was completely inelastic then the burden of the tax would fall entirely on the consumer. But this is not the only possibility. The alternative, as shown in the diagram, is that the supply curve is completely
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 13

Ass1Answers - UNIVERSITY OF ESSEX DEPARTMENT OF ECONOMICS...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online