Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

Foundation - BESS FC700 Economics

Instructions to students:

1. Your FC700 Economics module assessment is an online, timed open-book examination. This means that you can access module learning resources specified below (and only those materials) whilst you are answering the examination questions.  

Authorised materials:

Approved GU calculator

Key definitions’ materials

2. You are expected to work on this assessment on your own.  Please note that you may be required to attend an online meeting to confirm that it is your own work.

 

3. There are 10 questions in section A, 2 sets of questions in section B and 2 questions in section C. You should attempt to answer all questions in section A, one set of questions in section B and one question in section C.

4. In order to complete this assessment successfully you must:   

• read the question paper carefully before you begin to answer

• follow the instructions on how to answer each question fully

• type your answers into a document and save it as MS Word/pdf file.  For answers that require equations, formulae, graphs or diagrams you should write your answers clearly on paper and take a photograph of each page and insert in the word document.  Make sure you indicate the question you are answering.

• please save the file following this format:  

<YOUR STUDENT NUMBER – MODULE CODE – ECOexamFile(n)-10.12.21> eg: <TT225566-FC700-ECOexamFile(1)-10.12.21>

5. All workings must be shown for all calculations to attain full marks

6. You must submit your assessment file to the VLE before the extra time for upload is up.

 Now proceed to answer the examination questions below. ************************************************************************************************

This paper consists of THREE PARTS:  

 

Section A: Multiple Choice Questions (20 marks). You must answer ALL the questions in Section A. Each question in Section A is worth 2 marks  

 

Section B: Applied Mathematics and Short-Answer Questions (40 marks).  Answer ONE out of TWO questions. Each question in Section B is worth 40 marks

 

Section C: Essay-Style Questions (40 marks).  Answer ONE out of TWO questions.  Each question in Section C is worth 40 marks

 

Attempt ALL Sections

 

Section A: Answer ALL questions

Figure 1

 

1. Based on the production possibilities frontier in Figure 1, which point indicates that resources are NOT fully utilized or are inefficiently allocated?                                                           B)

a. Point a. 

b. Point b. 

c. Point c. 

d. Point e. 

 

 

 

 

 

 

 

 

 

Figure 2

 

2. Figure 2 shows the market for pizza. Which figure shows the effect of a decrease in the price of a hamburger, which for consumers is a substitute for pizza?                                       (D)

a. Figure A

b. Figure B

c. Figure D

d. Figure B and C

Figure 3

 

3. Figure 3 illustrates the labour market for local fast-food restaurants. What would be the effects of a minimum wage imposed at £5.50 per hour?                                                             D)

a. A surplus of labour equal to 200 hours

b. A shortage of 400 hours

c. A surplus of labour equal to 400 hours

d. No effect because the minimum wage has no effect on the equilibrium price and quantity

 

Table 1

Labour (workers)

Total product (shirts)

0

0

1

50

2

120

3

180

4

220

5

250

4. Table 1 shows the short-run product schedule for Virginia's Shirts. The worker for whom the law of diminishing returns initially occurs is the ________ worker.                                     A)

a. 3rd  

b. 5th  

c. 2nd  

d. 4th  

Figure 4

 

5. In figure 4 above, Nike maximizes its profit if it sells ________ pairs of shoes per day.     a.150                                                                                              (B)

b. 120 

c. 137 

d. 87 

 

 

 

 

 

Figure 5

 

6. Figure 5 represents the market for crude oil. When hurricane destroys a major refinery, the: C)

a. demand curve for oil will not shift, and the supply curve for oil shifts from S2 to S1.  

b. demand curve for oil shifts from D1 to D2 and the supply curve for oil shifts from S2 to S1.  

c. demand curve for oil will not shift, and the supply curve for oil shifts from S1 to S2.  

d. demand curve for oil shifts from D1 to D2 and the supply curve for oil will not shift. 

7. The long run is a time frame in which:                                                                                       (B)

a. The quantities of all resources can be varied

b. All costs are sunk costs

c. The quantities of some resources are fixed and the quantities of other resources can be varied

d. The quantities of all resources are fixed 

8. If good A is an inferior good and income increases, the equilibrium price of A ________ and the equilibrium quantity of A ________.                                                                                                (A)

a. falls; decreases  

b. falls; increases 

c. rises; decreases 

d. rises; increases 

9. A local pizzeria raised its price from £9 to £11 for each pizza and the sales of its pizza decreased from 150 to 100 per day. What is the price elasticity of demand over the specific range of the demand curve between a price of £9 and £11?                                                                           D

a. 2 

b. ½  

c. -2  

d. -1/2 

10. A firm's long-run average cost curve                                                                                    D

a. Is U-shaped 

b. Tells the firm which plant size to use and which quantity of labour to use to minimize the cost of producing any level of output. 

c. Shows the lowest attainable average total cost of producing any level of output when the plant and labour are variable. 

d. All of the above. 

 

 

 

 

 

 

 

PLEASE CONTINUE TO SECTION B 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Section B: Answer 1 out of 2 Questions

 

1. Given the demand equation:

 

��� = −���! − 10��� + 150 

a) (i) Define price elasticity of demand.            

(3 marks)

(ii) Given the equation above, find the price elasticity of demand when Q=4.  

(4 marks)

 

(iii) Given the price elasticity of demand in (ii), estimate the percentage change in price needed to increase quantity demanded by 10% and interpret your answer.                 (3 marks)

b) If the demand for petrol is price inelastic, what effect will an increase in price of petrol have on total revenue petrol producers? Discuss using a diagram.         (6 marks) c) Given the demand function  

��� = 500 − 3��� − 2���" + 0.01��� Where P = 20, ���" = 30 ��������� ��� = 5000, find:

Note: ��� is the price of the good, ���" is the price of an alternative (related) good, ��� is income

i. The price elasticity of demand           (2 marks) ii. The cross-price elasticity of demand           (2 marks) iii. Income elasticity of demand             (2 marks)

iv. If incomes rise by 5%, calculate the corresponding percentage change in demand. Is this good an inferior, a normal or a superior/luxury good?     (2 marks)

d) Using examples, discuss 4 factors that influence the price elasticity of demand.  (16 marks)

(40 marks)

 

2. The demand and supply equations of petrol/gasoline are given by  

��� = −4���# + 120 ��� =  ���$ + 29 

a) Calculate the equilibrium price and quantity.                                        (5 marks)

b) Calculate the new equilibrium price and quantity after a fixed tax of £13 per litre is imposed. Based on your answer, who pays the tax? Explain.                (10 marks)

c) With the aid of separate labelled diagrams in each case, predict and explain the likely effect of the following events on the equilibrium price and quantity of petrol in the UK. Remember to explain the adjustment process in the market.

i. The price of crude oil rises           (5 marks)

ii. Workers in a large firm that produces petrol go on strike (refuse to work)    

(5 marks) iii. The price of kerosene (a substitute in production) increases (5 marks)

d) The demand and supply functions for two interdependent goods are given by  ���#% = 10 − 2���% + ���! 

���#! = 5 + 2���% − 2���! 

���$% = −3 + 2���! 

���$! = −2 + 3���! 

i. Calculate the equilibrium price and quantity for this two-commodity model.             (6 marks) ii. Are these goods substitutable or complementary? Explain            (4 marks)

(40 marks)

 

 

 

 

 

 

PLEASE CONTINUE TO SECTION C 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Section C: Answer 1 out of 2 Questions 

1. In the last few years, the cost of renting a house/flat in Edinburgh has increased sharply. Government would like to intervene in the housing market in order to reduce the cost of renting.  Government is considering two options: imposing a rent ceiling or subsidising the construction of new housing.

 

With the aid of labelled diagrams, compare and contrast the potential impact of these two policies (rent ceiling and subsidy) on the market for rented accommodation, tenants and property owners.

Which policy would you recommend and why? Detailed explanations are required here.  

                       (40 marks)

 

2. Using the issues of globalization, technological development/internet and climate change, does the individual pursuit of self-interest always promote the best interests of the society? Discuss in detail using examples.                              (40 marks) 

 Does the pursuit of self-interest always promote the best interests of society?

  I think so. While business owners are pursuing interests, they will want more benign and sustainable development, so that they can complete the perfect integration of individuals and society.

  For the company's patented technology, technology companies can supervise and urge legal institutions to take corresponding measures to improve the protection of intellectual property rights. While protecting their own interests, the same applies to other large and small businesses and individuals in society.

  Companies such as Google, IBM, and Intel will not only have a promotional role in the law, but also seek more benefits in order to seize a larger market share in the competition. They will speed up the development of their patents, pursue innovation, and continue to update technology in the competition in an attempt to win. And this process will promote social development and improve people's living standards.

  From the perspective of globalization, Apple is undoubtedly a very typical case. Through the transfer of technology industries in East Asia, the manufacturing industry and factories will be transferred to the region to provide more jobs for them, increase the employment rate, and promote the local social and economic development. From this point of view, Apple has optimized its industrial structure, won more profits, and improved the global market.

  Let's look at the climate again. For sustainable development, energy companies will choose to improve technical shortcomings or heavily polluted parts of the production process, and strive to build environmental protection facilities. These measures not only protect the social and natural ecological environment, but also preserve more long-term benefits for itself.

  From the above aspects, it is not difficult to see that the process of pursuing the amplification of personal interests will become the promotion and promotion of collective benefits.

 

 

 

***********************This is the end of the examination paper *************************