Vacation Homework

Economics

Grade -9(A/B)

1.       Explain the difference between an equilibrium price and a disequilibrium price.[4]

2.       Many more people travel by aeroplane than ten years ago. With the help of a demand and supply diagram, explain what might have happened in the market for air travel to cause this increase. [6]

3.       Define price elasticity of demand and suggest why different goods have different price elasticities. [5]

4.       Discuss whether the knowledge of price elasticity of demand is of use to a company selling holiday tours [5]

5.       A combination of excess supply, weak consumer demand and competition from new channels such as the internet has pushed prices down in shops for goods from clothing to electrical products.

a.       Identify three causes of a change in the demand for a good. [3]

b.      Using demand and supply analysis, explain whether the reasons given in the above extract would lead to the stated effect on prices. [7]

c.       Explain how price elasticity of demand is calculated. [3]

d.      Discuss whether clothing and electrical products would be likely to have elastic or an inelastic price elasticity of demand. [7]

6.       Distinguish between a quota and subsidy. [5]

7.       Explain, using a demand and supply diagram, what effect would be likely to occur in a market if the government introduced a subsidy on the production of a good. [5]

8.       Tobacco growers in the US want to raise prices but the spokesman has said the tobacco industry was no longer in a position where it could increase prices in order to increase revenue. Use the concept of price elasticity of demand to discuss what the spokesman meant. [7]