QUESTIONI In each of the following cases only one answer is correct. wwite the l

Question

QUESTIONI In each of the following cases only one answer is correct. wwite the letter thet reprea next to each humber..g. 333 a t 1 Which one of the following staterments is incorrect? a) Our wants are unlimited b) Our needs are limited c) A typical example of market demand is a demand fdlaim) ty a trade union for incred d) People demand only the things that they want. 1.2 The diagram below shows an economy's production posibilities for two enods serig vehicles. Use this diagram to answer the question below Motor vehicles ith reference to the above production possibilities frontier, we can say that a) The opportunity cost of producing 0a motor vehicles is Ob aeroplanes The opportunity cost of producing one more motor vehicle is higher at f than at e d The opportunity cost of producing one more aeroplane is higher at g than at f d) The opportunity cost of producing 0a motor vehicles is cb aeroplanes. 3 In the market for public transport, which of the following variables would decrease demand, ceteris paribus? a) An increase in the price of private motor vehicies ) A decrease in the price of private motor vehicles.") c) An increase in price of private motor vehicle service plans d) A decrease in the price of bus tyres

Explanation / Answer

Answers:-

1.1- a-"Human wants are unlimited". Moreover, the resources to satisfy those wants are limited.

1.2-d-"The opportunity cost of producing 0a motor vehicles is cb aeroplanes." If there was production of only aeroplanes then its total production will be 0c.But to produce 0a units of Motor Vehicles ,the economy is able to produce only 0b level of aeroplanes. The economy gives up cb units of aeroplane which is the opportunity cost of producing 0a motor vehicles.

1.3-b-"A decrease in the price of private motor vehicles". Private motor vehicles and public transport are substitutes for each other. A decrease in the price of private motor vehicles will lead to an increase in their purchase and thus their use. It will further lead to a decreased demand for public transport, ceteris paribus.

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