Economics Qtest Assignment Solution - Semester X, University Name

This economics assignment solution addresses key concepts including production possibility frontiers (PPF), labor market equilibrium, supply and demand dynamics, and price controls (flooring and ceilings). The solution analyzes the impact of technological advancements, labor performance, economic growth, and war on PPF. It examines shifts in supply and demand curves in response to changes in fuel prices and government interventions. The assignment further explores labor market equilibrium, the effects of global recessions, and the implications of price flooring and ceilings. Finally, it identifies and explains the characteristics of public goods such as data publishing and country custom systems. The solution includes diagrams and explanations to illustrate economic principles.

Running head: QTEST
Qtest
Name of the student:
Name of the University:

QTEST
Table of Contents
Question 1........................................................................................................................................3
Part a)...........................................................................................................................................3
Part b)...........................................................................................................................................3
Part c)...........................................................................................................................................3
Part d)...........................................................................................................................................3
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Question 5........................................................................................................................................5
Part a)...........................................................................................................................................5
Part b)...........................................................................................................................................6
Part c) Price Flooring...................................................................................................................6
Part d) Price Ceiling.....................................................................................................................7
Question 7........................................................................................................................................8

QTEST
Question 1
Part a)
Once the technology improves the output, it has been caused by the research and development
change because of new technologies. This can take place because of increase in opportunity cost
which can be further explained that with an increase in the production of one product happens at
the expense of other. As a result, the unattainable points at PPF would move towards the point on
the PPF, making it attainable in the economy.
Part b)
Labor performance is one of the fixed resources that affect the output. If here is illness, then less
labor would constitute to production level which will further create inefficiency. This will lead
to increasing opportunity costs because they are not suited for producing one good to other. A
labor intensive product cannot be possibly replaced for a capital intensive product as the output
is not put to its best alternative use. The PPF might shift inwards to the left with capital to labor
raised with the shrinkage.
Part c)
If an economy approves, then it might include changes in amount of resources whether it is
natural resources, factories, etc. or through research and development. This will bring an outward
shift in the PPF.
Part d)
In case of a war, there is great impact on the capital intensive as a result, the production capacity
of the economy is reduced and it will shift the PPF curve to the left bringing it to the unattainable
point of output.
Question 2
As per the scenario, once the fuel prices of a car / plane prices drops, the price falls from the
equilibrium E at price P0 to P1. The price falls at P1, making a shift in the supply curve
highlighting the increase in fuel quantity. However, to restrict the supply, the supply falls from

DD
S0
P1
Q0
P2
Price
of
Fuel
S1
P0 Price
fall
Consumption does not
increase drastically
Fuel
Increase in
Production
costs
Q1
E0
E1
QTEST
S0 to S1, creating a cost of maintaining the car or holiday. The costs are known by productions
costs that are incurred to increase the quantity from Q0 to Q1. However, if the price further falls,
then the market forces will shift to Q0 further. Hence, this will be giving same level of fuel when
in equilibrium.
Question 3
Quantity supplied changes where there is change in the price along the supply curve. For
example, if due to hostilities between Middle East and Syria, the government decreases the price,
as a result, with the decision of OPEC, the quantity of oil supplies decreases across countries,
leading to contraction of supply. On the other hand, butter and margarine are two substitutes, but
due to changing food pattern, margarine has become more profitable in supply leading to
decrease in quantity of butter at the same price. The same can be seen when the supply shifts left
from S0 to S1.

Q0Q1
S0
S1’
P1
P*
SS
Price
Quantity supplied
Price
Quantity supplied
Contraction
Decrease
Decrease in Quantity Supplied of Oil Decrease in Supply of Butter
Q0Q1
P*
A
B
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Question 5
Part a)
As per this part, labour market equilibrium is given at E0 where wage is set at equilibrium at the
given employment level. The labor market is in equilibrium when supply equals demand such as
all who are looking for work at the going wage can find a job. The two triangle depicts, producer
and worker surplus in the diagram

E0
Hourly Wage
W0
Employment
E0
Market at Equilibroum
DL
SL
Producer surplus
Worker surplus
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Part b)
The global recession has creates a shift in minimum wage by increasing unemployment levels
(unskilled workers) and pushing away of equilibrium. As a result, there is need for price
flooring/ price ceiling in the market based on the current scenario of unemployment. At most, it
could have been solved by market forces of demand and supply and bringing it back to
equilibrium E0
Part c) Price Flooring
This is when government sets a minimum price that increases unemployment and creates an
excess supply in the market. This is applicable in the global recession period, when there are
fewer jobs and people employed for the work are more. This is where disguised unemployment
takes place. The government costs increases at E2 because the employment opportunities are
limited till E1 as supply of labour has exceeded the demand for labour, causing more
unemployment in the economy.

E0
Hourly Wage
W0
Employment
E0
Wmin
Unemployment
Price Flooring
Wage min = Price flooring
E1 E2
DL
SL
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Part d) Price Ceiling
This is when government sets a minimum price that increases employment opportunities and
creates an excess demand for skilled workers in the market. The number of employment
vacancies increases at E2 because the skilled labourers/ workers are limited till E, this further
creates unemployment in the economy. As demand for labour has exceeded the supply of
labour, causing more unemployment in the economy due to getting appropriate personnel for the
jobs created.

DL
E0
Hourly Wage
SL
W0
Employment
E0
Wmin
Vacancies: Employment opportunities
Price Ceiling
Wage min = Price ceiling
E1 E2
QTEST
Question 7
The types of public goods are “data publish” and “country custom system” where all can
consume the good as it is available and no one can be excluded out of it. Public good are “non
rival” and “non excludable”’ goods.
The data publish, is available to all, everyone who used it gets a clear knowledge and
transparency. Moreover, it cannot be excludable as it is needed in different areas and cannot be
excluded. Secondly country custom system is even non rival as their no other systems to be
followed and no excludable because everyone has to follow it.