Assignment on Economics

Added on - 11 Jan 2021

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Economics
Table of ContentsQUESTION 1...................................................................................................................................1A).................................................................................................................................................1b).................................................................................................................................................2c)..................................................................................................................................................2QUESTION 2..................................................................................................................................3QUESTION 3...................................................................................................................................4..........................................................................................................................................................4QUESTION 4...................................................................................................................................5(a) determination of fixed and variable cost in jewellery making shop......................................5(b) Law of diminishing returns and its relation with cost...........................................................6QUESTION 10.................................................................................................................................8A).................................................................................................................................................8B).................................................................................................................................................8
QUESTION 1A)External cost and benefits impact on resource allocation to great extent. Negativeexternality is the example of external cost; if it is not taken into consideration then it would helpin increasing production. This will create situation of over allocation of resources. On other handexternal benefits such as positive externality create situation of under allocation of resources inthe business unit (Kneese, Ayres and d'Arge, 2015).Figure1Social costSource: (Social cost and externalities, 2018)1
Figure2: Positive externalitiesSource: (Social cost and externalities, 2018)b)Public goods have features of no excludable and non-rivalrous. This makes easy for theproducers to sell their goods in the market. Such type of items and services are financed by Taxrevenues. Thus, good and services have become the public goods, by this way companies can selltheir material in the market easily (Public Good and Private Good: Difference,2018). Publicgoods are consumed by everyone and private goods are rival thus, all the goods became public.Another reason of becoming public good is that these types of materials are non- rejectable.That is beneficial for the company in order to increase its production and enhancing salesrevenues.c)Privately owned engineeringand material researchpublic goodsThis is public goods because ithas non rivalry characterises2
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