It should be noted that this does not denote unemployment but will only shift occupations.
g) Higher unemployment benefits discourage school-leavers from working. As some resources become unemployed, this will cause a decline in production represented by a movement to a point within the frontier.
Suppose a news article reports, 'Poor wine grape harvests in France have brought financial gain to Australian winemakers. Sales of Australian wines are booming and wine prices are the best ever.' Analyse the economics of the events reported by answering the following questions:
a. How has the market for French wines been affected by poor wine grape harvests Explain with the aid of a diagram. In your diagram, indicate what is happening to the equilibrium price of French wines and the equilibrium quantity trade in this market.
The poor wine grape harvest move the supply curve to the left. With the new supply schedule, the equilibrium price is higher. This is represented from the change in equilibrium point from 1 to 2 with prices rising from P to B.
The presence of Australian imports in the market of French wine depresses sales of French wine. In the figure above, the intersection of supply and demand in France is denoted by point 1 at price P. However, Australian wine is charged at price A which is lower. Thus, consumers turn to the cheaper products
Section 3 9 Multiple choice questions 2 marks each (20 marks)
1. The problem of scarcity:
a. Exists only in times of economic depression for rich countries
b. Is identical to poverty
c. Exists in all economies
d. Can be eliminated by allocating available resources to the poorer sections of a society.
2. Because productive resources are scarce, we must give up some of one good in order to acquire more of another. This is the essence of the concept of:
b. Monetary exchange
c. Comparative advantage
d. Opportunity cost
3. Which of the following does not change supply
a. A change in price of the good in question
b. A change in the state of technology
c. A change in producer expectations
d. A change in the number of producers
4. Price and quantity supplied are usually directly related because
a. Higher prices mean that producers are rewarded more for production
b. The law of increasing opportunity cost applies
c. There is more prestige associated with producing a high-priced good
d. a and b
5. Demand reflects the quantity that consumers