Economics Study Material

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

1ECONOMICS
Table of Contents
Question 1..................................................................................................................................2
Question a...............................................................................................................................2
Question b..............................................................................................................................2
Question c...............................................................................................................................3
Question d..............................................................................................................................3
Question 2..................................................................................................................................4
Question a...............................................................................................................................4
Question b..............................................................................................................................4
Question c...............................................................................................................................5
Question e...............................................................................................................................6
Question 3..................................................................................................................................7
Question a...............................................................................................................................7
Question b..............................................................................................................................8
Question c...............................................................................................................................8
Question d..............................................................................................................................8
Question e...............................................................................................................................8
Question f...............................................................................................................................8
Question g..............................................................................................................................9
Question h............................................................................................................................10
Question 4................................................................................................................................10
Question a.............................................................................................................................10
Question b............................................................................................................................11
Question c.............................................................................................................................11
Question d............................................................................................................................12
Question 5................................................................................................................................12
Question a.............................................................................................................................12
Question b............................................................................................................................13
Question c.............................................................................................................................13
Question d............................................................................................................................13
Question e.............................................................................................................................13
References................................................................................................................................14

2ECONOMICS
Question 1
Question a
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900
0
170
340
510
680
850
1020
1190
1360
Production Possibilities Frontier (PPF)
Semillon
Semillon Chardonnay
Figure 1: Production Possibilities Frontier for ECON Wines
Question b
Figure 2: Efficient production combination on PPF
The production combination of 900 cases of Semillon and 680 cases of Semillon
Chardonnay is on the PPF and shown as F. As the production point is on the PPF, this shows
an efficient production point (Cowell, 2018).

3ECONOMICS
Question c
Natural calamities like drought destroys economic resources. The destruction of
resources hamper production of all the goods in the economy. The lower availability of
resources to all industry reduces output and shifts the PPF inward.
Question d
Figure 3: Market for Semillon Wine
The above describes the entire market of Semillon wine. The demand for Semillon
wine is given by DD and the supply of Semillon wine is given as SS. The initial equilibrium
occurs at point E with equilibrium price and quantity being P0 and Q0 respectively. Grape is
one vital input in wine production. The wide spread drought that reduces grape yields
hampers the production of wine. This shifts the supply curve of Semillon wine to the left to
S1S1. The supply shortage tends to increase equilibrium price of wine and decrease the
equilibrium quantity of wine. An economy wide increase in tax reduces disposable income of
average household. With a lower income, people tend to cut their consumption expenditure