Which of the following can be used to calculate the price elasticity of demand?
The output and cost of production of rice (in bags) are presented in the table below. Use the information in the table to answer the questions that follow.
| Output of rice (in bags) | 0 | 1 | 2 | 3 | 4 |
| Total Variables Coat (TVC) $ | 0 | 5 | 7 | 10 | 20 |
| Total Cost (TC) $ | 7 | 12 | 14 | 17 | 27 |
(a) Calculate the
(i) Average Fixed Cost (AFC) at output levels 0,2 and 4
(ii) Marginal Cost (MC) at all levels of output
(b) If the price of a bag of rice were $10,
(i) calculate the profit/loss at all levels of output.
(ii) at what output level(s) is the maximum profit made?
(c) Draw the marginal cost curve (the use of graph sheet is essential).
The table below shows the scale of preference of a student - Mr Smith whose disposable income is $7.00. Use the information in the table to answer the auestoins that follow.
| Items needed | Price ($) |
| Textbook | 5.00 |
| Shirt | 2.00 |
| Shoes | 3.00 |
| Trousers | 3.00 |
| Notebook | 1.00 |
| School fees | 7.00 |
| Mattress | 10.00 |
(a)(i) What will Mr. Smith spend his money on?
(ii) Explain your answer in 2(a)(i).
(b)(i) What is the opportunity cost of Mr. Smith's decision in 2(b)(i)?
(ii) Explain your answer in 2(b)(i).
(c)(i) If Mr. Smith's disposable income increases to $10.0, what will he spend it on?
(ii) What is the opportunity cost of the decision in 2(c)(i)?
(d) Define "scale of preference" and "opportunity cost".
(e) What is the importance of a scale of preference?
(a) What is:
(i) peasant farming?
(ii) commercial farming?
(b) Describe five ways in which agriculture contributes to the economic development of your country.
(a) Distinguish between small scale prodution and large scale production
(b) Describe any five internal economies of large scale production.
