Question 1

WHAT ARE THE THREE ELEMENTS THAT ALL ECONOMISTS AGREE DEFINE THE ECONOMICS

Accepted Answer

1. SCARCITY
2. DEMAND - LIMIT LESS
3. CHOICE

Question 2

WHAT ARE THE FOUR FACTORS OF PRODUCTION

Accepted Answer

1. LAND
2. LABOUR
3. CAPITAL
4. ENTERPRISE

THESE ARE SCARCE AND NEED TO BE ALLOCATED TO THE BEST USES,  THE PRICE/MKT MECHANISM IS USED TO DO THIS.  SOMETIMES THE GOVERNMENT WILL ALLOCATE THOSE RESOURCES.

Question 3

WHAT DO ECONOMIST MEAN BY LAND AS A FACTOR OR PRODUCTION

Accepted Answer

ENCOMPASSES ALL NATURAL RESOURCES.  EXAMPLES
1. FERTILE LAND FOR GROWING CROPS
2. NATURAL HARBOUR FOR BERTHING VESSELS
3. OIL/COAL IN SAUDI OR AUSTRALIA
4. CLIMATE FOR GROWING COFFEE
5. COAL FOR EXAMPLE IS FINITE BUT WIND POWER IS A RENEWABLE SOURCE

Question 4

WHAT DO ECONOMIST MEAN BY LABOUR.

Accepted Answer

THIS IS THE HUMAN INPUT OR CONTRIBUTION TO PRODUCTION.  THE AVAILABILITY AND INTELLECTUAL CONTRIBUTION WILL DEPEND ON THE NATION ITSELF BASED ON THE POLITICAL/CULTURAL AND AGE DEMOGRAPHICS.  INDIA HAS MASS LABOUR WHILE JAPAN USES INTELLECTUAL PROPERTIES.

Question 5

GIVE EXAMPLES OF WHAT ECONOMIST MEAN BY CAPTIAL

Accepted Answer

1.  MACHINES, BUILDINGS,TOOLS ETC
2.  ALSO INFRASTRUCTURE CAPITAL CAN MEAN ROADS, RAIL, AIRPORTS, PORTS ETC.  CAPITAL IN THIS SENSE DOES NOT MEAN MONEY.

Question 6

WHAT DO ECONOMISTS MEAN WHEN THEY SAY ENTERPRISE.

Accepted Answer

THE ENTREPRENEUR BRINGS ALL THE OTHER 3 FACTORS OF PRODUCTION TOGETHER AND UTILISES THE RESOURCES IN PRODUCTION.  DIFFERENT COUNTRIES USE THE FACTORS DEPENDENT ON THEIR ABUNDANCE. EACH NATION UTILISES THEIR SCARCE RESOURCES APPROPRIATELY.

Question 7

WHAT POINT DID ADAM SMITH SAY IN 1776

Accepted Answer

"LED BY AN INVISIBLE HAND TO PROMOTE AN END WHICH WAS NO PART OF HIS INTENTION"

Question 8

EXPLAIN WHAT UTILITY MEANS.

Accepted Answer

RESOURCES ARE USED TO CREATE UTILITY. THEY GIVE "REAL NEED FULFILMENT".

Question 9

WHAT DOES VALUE FOR MONEY MEAN TO THE INDIVIDUAL.

Accepted Answer

THE "REAL NEED FULFILLMENT" RECEIVED FROM THE GOODS WAS WORTH THE COST PAID.

Question 10

HOW CAN SHIPPING CREATE UTILITY.

Accepted Answer

1 PLACE UTILITY - BEING ABLE TO DELIVER POTATOES FROM EGYPT TO SAY HOLLAND.
2 TIME UTILITY - DELIVERING FOR E.G. HEATING OIL TO NORWAY WHEN ITS NEEDED.

Question 11

EXPLAIN WHATS A NOMINAL VALUE.  WHY CANT YOU COMPARE NOMINAL VALUES OVER A PERIOD OF TIME.

Accepted Answer

IN ECONOMIC TERMS, THE NOMINAL VALUE IS THE ACTUAL PRICE PAID AT THE TIME.  IN A TIME OF CHANGING PRICES YOU NEED TO ADJUST NOMINAL VALUES FOR THOSE PRICE CHANGES.

Question 12

HOW DOES THE REAL VALUE DIFFER

Accepted Answer

IF I PAID £100 IN 2002 AND £300 IN 2010.  THE £300 IN TIMES OF CHANGING PRICES WOULD HAVE A GREATER PURCHASING POWER IN 2002.  THEREFORE YOU NEED TO ADJUST FOR THOSE PRICE CHANGES USING AN INDEX.

Question 13

EXPLAIN OPPORTUNITY OR ALTERNATIVE COST DOCTRINE.

Accepted Answer

MEASURES THE UTILITY OF THE NEXT BEST ALTERNATIVE. I.E. THE COST OF GIVING UP PRODUCT X IN FAVOUR OF PRODUCT Y.

Question 14

WHAT DOES THE PRICE MECHANISM DESCRIBE.

Accepted Answer

THE PRICE OR MKT MECHANISM IS THE PHENOMENON OF THE INTERACTION OF THE MARKET FORCES OF DEMAND AND SUPPLY TO REACH AN EQUILIBRIUM PRICE & QTY IN A MKT SUCH THAT ANY AND ALL D IS SATISIFIED AND ALL SUPPLY SOLD.BEST ALLOCATION OF SCARCE RESOURCES ACHIEVED

Question 15

NAME ONE OF THE THREE IMPORTANT FUNCTIONS THE PRICE MECHANISM PLAY IN THE MARKET.

Accepted Answer

1 SIGNALLING FUNCTION-THEY ADJUST TO DEMONSTRATE WHERE RESOURCES ARE NEEDED. PRICE RISES OR FALLS DETERMINED BY SURPLUS OR SCARCITY.
2 CONSUMERS SIGNAL CHANGES TO NEEDS AND WANTS. AS DEMAND INCREASES PRODUCTS PRICE RISES AS

Question 16

NAME A SECOND OF THE  THREE IMPORTANT FUNCTIONS THE PRICE MECHANISM PLAY IN THE MARKET.

Accepted Answer

2. TRANSMISSION OF PREFERENCE. CONSUMERS BY THEIR CHOICES SEND INFORMATION TO THE PRODUCERS ABOUT CHANGING NEEDS AND WANTS.  DEMAND INCREASES AND SIGNALS HIGHER PRICES WHICH SUPPLIERS WANT TO CASH IN ON AND INCREASE OUTPUT.

Question 17

NAME A THIRD OF THE  THREE IMPORTANT FUNCTIONS THE PRICE MECHANISM PLAY IN THE MARKET.

Accepted Answer

3. SCARCE RESOURCE-PRICE SERVES TO RATION SCARCE RESOURCE WHEN DEMAND OUTSTRIPS SUPPLY.  WHEN PRICES INCREASE ONLY THOSE WILLING AND ABLE  TO PAY THE OPPORTUNITY COST AND EQUATES DEMAND AND SUPPLY.

Question 18

HOW ARE PRICE AND DEMAND RELATED.

Accepted Answer

THE GENERAL TENDENCY IN EVERYDAY ACTIVITY IS AN  INVERSE ONE.  ALL OTHER THINGS BEING EQUAL. IN OTHER WORDS PRICE RISES DEMAND FALLS AS THE OPPORTUNITY COST OF THE PRODUCT BECOMES TOO HIGH FOR CONSUMERS.

Question 19

EXPLAIN THE RELATIONSHIP BETWEEN PRICE AND SUPPLY.

Accepted Answer

AS PRICE MOVES UPWARDS DUE TO SURPLUS DEMAND, THEN THIS SIGNALS THE PRODUCERS TO SUPPLY MORE PRODUCTS AT THE HIGHER PRICES TO TAKE ADVANTAGE OF THE EXTRA PROFIT.

Question 20

WHATS PRODUCTION POSSIBILITY FRONTIER

Accepted Answer

SHOWS WHAT COMBINATIONS OF OUTPUT CAN BE PRODUCED WITHIN AN ECONOMY GIVEN A FIXED LEVEL OF TECHNOLOGY AND THE LIMITED RESOURCE. NOTE: ITS NOT WHATS BEING PRODUCED NOW.

Question 21

HOW CAN A PPF SHIFT

Accepted Answer

IMPROVEMENTS IN LAND LABOUR CAPITAL & ENTERPRISE SHIFT THE PPF OUTWARDS. THIS COULD BE CLASSED AS ECONOMIC GROWTH.

Question 22

EXPLAIN THE DEFINITION OF DEMAND

Accepted Answer

DEMAND MEASURES THE QUANTITY OF A GOOD THAT WILL BE PURCHASED AT A GIVEN PRICE IN A GIVEN TIME PERIOD

Question 23

WHAT IS EFFECTIVE DEMAND

Accepted Answer

THE WILLINGNESS AND ABILITY TO BUY A GOOD.  i MAY HAVE THE ABILITY TO BUY 100 CANS OF COKE, BUT I AM NOT WILLING. OR I HAVE THE WILLINGNESS TO PURCHASE A SPORTS CAR BUT NOT THE ABILITY.

Question 24

WHAT HAPPENS TO DEMAND WHEN PRICE CHANGES

Accepted Answer

ASSUMING ALL OTHER FACTORS REMAIN CONSTANT.  (CETERIS PARIBUS. WHEN PRICE CHANGES QUANTITY DEMANDED, THEN THIS CAUSES MOVEMENT ALONG THE  D CURVE.

Question 25

WHAT OTHER FACTORS INFLUENCE DEMAND

Accepted Answer

INCOME LEVELS
SIZE OF POPULATION
PRICE OF OTHER GOODS
MARKETING-FASHION-LAW-WEATHER
IF ONE OF THESE CHANGE NOT THE PRICE, THEN THE WHOLE DEMAND CURVE SHIFTS.

Question 26

GIVE AN EXPLANATION OF SUPPLY

Accepted Answer

THE QTY OF A GOOD THAT WILL BE OFFERED FOR SALE IN A MKT AT A GIVEN PRICE AN IN A GIVEN PERIOD OF TIME.  PRODUCERS NEED TO BE AWARE OF THE COST OF PROD I.E. LAND LABOUR AND CAPITAL.  THE HIGHER THE PRICE IN THE MARKET THE MORE PRODUCERS WILL ENTER THE MKT

Question 27

HOW WILL CHANGES IN COSTS OF PRODUCTION AFFECT THE SUPPLY CURVE

Accepted Answer

A CHANGE IN BUNKER COSTS UPWARDS, WILL AFFECT THE COST OF THE VESSEL AND HENCE A SHIFT INWARDS AS MORE OWNERS DECIDE WHETHER TO PROVIDE VESSELS.  THIS IS A CHANGE IN SUPPLY NOT A CHANGE IN QTY SUPPLIED.

Question 28

EXPLAIN HOW MARKETING WILL AFFECT THE PRICE AND QTY OF A SUCCESSFUL MARKETING CAMPAIGN FOR A SUBSTITUTE PRODUCT

Accepted Answer

THE CAUSE:  FALLING DEMAND DUE TO SUBSTITUTE MKTING. THE D WILL SHIFT TO THE LEFT.AS A CONSEQUENCE PRICE WILL FALL.  THIS MEANS SUPPLIERS WILL PROVIDE LESS QTY AS PROFIT IS ERODED. THEREFORE A NEW EQUILIBRIUM IS ESTABLISHED.S HAS NOT CHANGED ONLY QTY.

Question 29

HOW WOULD LAWS PASSED TO MAKE BUILDINGS SAFER AFFECT THE EQUILIBRIUM.

Accepted Answer

CAUSE:SUPPLIERS INCUR LARGER COSTS AND THEREFORE SUPPLY LESS HOUSING.DEMAND REMAINS THE SAME BUT THE EQUILIBRIUM SHIFTS UPWARDS. AND DEMAND SHIFTS UP ALONG THE DEMAND CURVE MEANING LESS PURCHASE AT THE HIGHER PRICE. THE DEMAND REMAINED THE SAME.

ECONOMICS CH 1

ECONOMICS OF SEA TRANSPORT AND INT TRADE

Question	Answer
WHAT ARE THE THREE ELEMENTS THAT ALL ECONOMISTS AGREE DEFINE THE ECONOMICS	1. SCARCITY 2. DEMAND - LIMIT LESS 3. CHOICE
WHAT ARE THE FOUR FACTORS OF PRODUCTION	1. LAND 2. LABOUR 3. CAPITAL 4. ENTERPRISE THESE ARE SCARCE AND NEED TO BE ALLOCATED TO THE BEST USES, THE PRICE/MKT MECHANISM IS USED TO DO THIS. SOMETIMES THE GOVERNMENT WILL ALLOCATE THOSE RESOURCES.
WHAT DO ECONOMIST MEAN BY LAND AS A FACTOR OR PRODUCTION	ENCOMPASSES ALL NATURAL RESOURCES. EXAMPLES 1. FERTILE LAND FOR GROWING CROPS 2. NATURAL HARBOUR FOR BERTHING VESSELS 3. OIL/COAL IN SAUDI OR AUSTRALIA 4. CLIMATE FOR GROWING COFFEE 5. COAL FOR EXAMPLE IS FINITE BUT WIND POWER IS A RENEWABLE SOURCE
WHAT DO ECONOMIST MEAN BY LABOUR.	THIS IS THE HUMAN INPUT OR CONTRIBUTION TO PRODUCTION. THE AVAILABILITY AND INTELLECTUAL CONTRIBUTION WILL DEPEND ON THE NATION ITSELF BASED ON THE POLITICAL/CULTURAL AND AGE DEMOGRAPHICS. INDIA HAS MASS LABOUR WHILE JAPAN USES INTELLECTUAL PROPERTIES.
GIVE EXAMPLES OF WHAT ECONOMIST MEAN BY CAPTIAL	1. MACHINES, BUILDINGS,TOOLS ETC 2. ALSO INFRASTRUCTURE CAPITAL CAN MEAN ROADS, RAIL, AIRPORTS, PORTS ETC. CAPITAL IN THIS SENSE DOES NOT MEAN MONEY.
WHAT DO ECONOMISTS MEAN WHEN THEY SAY ENTERPRISE.	THE ENTREPRENEUR BRINGS ALL THE OTHER 3 FACTORS OF PRODUCTION TOGETHER AND UTILISES THE RESOURCES IN PRODUCTION. DIFFERENT COUNTRIES USE THE FACTORS DEPENDENT ON THEIR ABUNDANCE. EACH NATION UTILISES THEIR SCARCE RESOURCES APPROPRIATELY.
WHAT POINT DID ADAM SMITH SAY IN 1776	"LED BY AN INVISIBLE HAND TO PROMOTE AN END WHICH WAS NO PART OF HIS INTENTION"
EXPLAIN WHAT UTILITY MEANS.	RESOURCES ARE USED TO CREATE UTILITY. THEY GIVE "REAL NEED FULFILMENT".
WHAT DOES VALUE FOR MONEY MEAN TO THE INDIVIDUAL.	THE "REAL NEED FULFILLMENT" RECEIVED FROM THE GOODS WAS WORTH THE COST PAID.
HOW CAN SHIPPING CREATE UTILITY.	1 PLACE UTILITY - BEING ABLE TO DELIVER POTATOES FROM EGYPT TO SAY HOLLAND. 2 TIME UTILITY - DELIVERING FOR E.G. HEATING OIL TO NORWAY WHEN ITS NEEDED.
EXPLAIN WHATS A NOMINAL VALUE. WHY CANT YOU COMPARE NOMINAL VALUES OVER A PERIOD OF TIME.	IN ECONOMIC TERMS, THE NOMINAL VALUE IS THE ACTUAL PRICE PAID AT THE TIME. IN A TIME OF CHANGING PRICES YOU NEED TO ADJUST NOMINAL VALUES FOR THOSE PRICE CHANGES.
HOW DOES THE REAL VALUE DIFFER	IF I PAID £100 IN 2002 AND £300 IN 2010. THE £300 IN TIMES OF CHANGING PRICES WOULD HAVE A GREATER PURCHASING POWER IN 2002. THEREFORE YOU NEED TO ADJUST FOR THOSE PRICE CHANGES USING AN INDEX.
EXPLAIN OPPORTUNITY OR ALTERNATIVE COST DOCTRINE.	MEASURES THE UTILITY OF THE NEXT BEST ALTERNATIVE. I.E. THE COST OF GIVING UP PRODUCT X IN FAVOUR OF PRODUCT Y.
WHAT DOES THE PRICE MECHANISM DESCRIBE.	THE PRICE OR MKT MECHANISM IS THE PHENOMENON OF THE INTERACTION OF THE MARKET FORCES OF DEMAND AND SUPPLY TO REACH AN EQUILIBRIUM PRICE & QTY IN A MKT SUCH THAT ANY AND ALL D IS SATISIFIED AND ALL SUPPLY SOLD.BEST ALLOCATION OF SCARCE RESOURCES ACHIEVED
NAME ONE OF THE THREE IMPORTANT FUNCTIONS THE PRICE MECHANISM PLAY IN THE MARKET.	1 SIGNALLING FUNCTION-THEY ADJUST TO DEMONSTRATE WHERE RESOURCES ARE NEEDED. PRICE RISES OR FALLS DETERMINED BY SURPLUS OR SCARCITY. 2 CONSUMERS SIGNAL CHANGES TO NEEDS AND WANTS. AS DEMAND INCREASES PRODUCTS PRICE RISES AS
NAME A SECOND OF THE THREE IMPORTANT FUNCTIONS THE PRICE MECHANISM PLAY IN THE MARKET.	2. TRANSMISSION OF PREFERENCE. CONSUMERS BY THEIR CHOICES SEND INFORMATION TO THE PRODUCERS ABOUT CHANGING NEEDS AND WANTS. DEMAND INCREASES AND SIGNALS HIGHER PRICES WHICH SUPPLIERS WANT TO CASH IN ON AND INCREASE OUTPUT.
NAME A THIRD OF THE THREE IMPORTANT FUNCTIONS THE PRICE MECHANISM PLAY IN THE MARKET.	3. SCARCE RESOURCE-PRICE SERVES TO RATION SCARCE RESOURCE WHEN DEMAND OUTSTRIPS SUPPLY. WHEN PRICES INCREASE ONLY THOSE WILLING AND ABLE TO PAY THE OPPORTUNITY COST AND EQUATES DEMAND AND SUPPLY.
HOW ARE PRICE AND DEMAND RELATED.	THE GENERAL TENDENCY IN EVERYDAY ACTIVITY IS AN INVERSE ONE. ALL OTHER THINGS BEING EQUAL. IN OTHER WORDS PRICE RISES DEMAND FALLS AS THE OPPORTUNITY COST OF THE PRODUCT BECOMES TOO HIGH FOR CONSUMERS.
EXPLAIN THE RELATIONSHIP BETWEEN PRICE AND SUPPLY.	AS PRICE MOVES UPWARDS DUE TO SURPLUS DEMAND, THEN THIS SIGNALS THE PRODUCERS TO SUPPLY MORE PRODUCTS AT THE HIGHER PRICES TO TAKE ADVANTAGE OF THE EXTRA PROFIT.
WHATS PRODUCTION POSSIBILITY FRONTIER	SHOWS WHAT COMBINATIONS OF OUTPUT CAN BE PRODUCED WITHIN AN ECONOMY GIVEN A FIXED LEVEL OF TECHNOLOGY AND THE LIMITED RESOURCE. NOTE: ITS NOT WHATS BEING PRODUCED NOW.
HOW CAN A PPF SHIFT	IMPROVEMENTS IN LAND LABOUR CAPITAL & ENTERPRISE SHIFT THE PPF OUTWARDS. THIS COULD BE CLASSED AS ECONOMIC GROWTH.
EXPLAIN THE DEFINITION OF DEMAND	DEMAND MEASURES THE QUANTITY OF A GOOD THAT WILL BE PURCHASED AT A GIVEN PRICE IN A GIVEN TIME PERIOD
WHAT IS EFFECTIVE DEMAND	THE WILLINGNESS AND ABILITY TO BUY A GOOD. i MAY HAVE THE ABILITY TO BUY 100 CANS OF COKE, BUT I AM NOT WILLING. OR I HAVE THE WILLINGNESS TO PURCHASE A SPORTS CAR BUT NOT THE ABILITY.
WHAT HAPPENS TO DEMAND WHEN PRICE CHANGES	ASSUMING ALL OTHER FACTORS REMAIN CONSTANT. (CETERIS PARIBUS. WHEN PRICE CHANGES QUANTITY DEMANDED, THEN THIS CAUSES MOVEMENT ALONG THE D CURVE.
WHAT OTHER FACTORS INFLUENCE DEMAND	INCOME LEVELS SIZE OF POPULATION PRICE OF OTHER GOODS MARKETING-FASHION-LAW-WEATHER IF ONE OF THESE CHANGE NOT THE PRICE, THEN THE WHOLE DEMAND CURVE SHIFTS.
GIVE AN EXPLANATION OF SUPPLY	THE QTY OF A GOOD THAT WILL BE OFFERED FOR SALE IN A MKT AT A GIVEN PRICE AN IN A GIVEN PERIOD OF TIME. PRODUCERS NEED TO BE AWARE OF THE COST OF PROD I.E. LAND LABOUR AND CAPITAL. THE HIGHER THE PRICE IN THE MARKET THE MORE PRODUCERS WILL ENTER THE MKT
HOW WILL CHANGES IN COSTS OF PRODUCTION AFFECT THE SUPPLY CURVE	A CHANGE IN BUNKER COSTS UPWARDS, WILL AFFECT THE COST OF THE VESSEL AND HENCE A SHIFT INWARDS AS MORE OWNERS DECIDE WHETHER TO PROVIDE VESSELS. THIS IS A CHANGE IN SUPPLY NOT A CHANGE IN QTY SUPPLIED.
EXPLAIN HOW MARKETING WILL AFFECT THE PRICE AND QTY OF A SUCCESSFUL MARKETING CAMPAIGN FOR A SUBSTITUTE PRODUCT	THE CAUSE: FALLING DEMAND DUE TO SUBSTITUTE MKTING. THE D WILL SHIFT TO THE LEFT.AS A CONSEQUENCE PRICE WILL FALL. THIS MEANS SUPPLIERS WILL PROVIDE LESS QTY AS PROFIT IS ERODED. THEREFORE A NEW EQUILIBRIUM IS ESTABLISHED.S HAS NOT CHANGED ONLY QTY.
HOW WOULD LAWS PASSED TO MAKE BUILDINGS SAFER AFFECT THE EQUILIBRIUM.	CAUSE:SUPPLIERS INCUR LARGER COSTS AND THEREFORE SUPPLY LESS HOUSING.DEMAND REMAINS THE SAME BUT THE EQUILIBRIUM SHIFTS UPWARDS. AND DEMAND SHIFTS UP ALONG THE DEMAND CURVE MEANING LESS PURCHASE AT THE HIGHER PRICE. THE DEMAND REMAINED THE SAME.

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