ECONOMICS

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Economics 247 Assignment 1 Version A This assignment has a maximum total of 100 marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 1 through 5. Answer each question clearly and concisely. 1. a. 3/3Define opportunity cost, and explain its importance in economics. (3 marks) -The opportunity cost of something is what you must give up of one thing, in order to get it. Opportunity cost is a key concept of economics because it is described as expressing the basic relationship between scarcity and choice. Opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently. b. 4/4The province of British Columbia hosted the…show more content…
If the minimum wage is above the equilibrium level, the quantity of labour supplied exceeds the quantity demanded. The result is unemployment. The minimum wage then raises the income of those workers who have jobs, but it lowers the incomes of those workers that cannot find jobs. Workers with high skills and much experience are not affected, because their equilibrium wages are well above the minimum. An example of a price ceiling is rent control. The goal of this policy is to help the poor by making housing more affordable.1/ 2 Often this is done in an attempt to increase equity 5. The following table shows the quantities of ice cream cones that will be demanded and supplied at various prices. Price Quantity of Ice Cream Demanded/Month Quantity of Ice Cream Supplied/Month $5 6,000 10,000 $4 8,000 8,000 $3 10,000 6,000 $2 12,000 4,000 $1 14,000 2,000 a. What is the equilibrium price and equilibrium quantity? (1 mark) 1/1 The equilibrium price is $4.00 and the equilibrium quantity is 8,000. b. Suppose the price for the ice cream is currently $5. Will this price result in a shortage or a surplus? How much is the shortage or surplus? What would you expect to happen to price? (2 marks) 2/2 This will result in a surplus of 4,000 ice creams, and you could expect the price to go down in order to sell the surplus. c. Suppose the price is currently $2. Will this price result in a shortage or a surplus? How much is the shortage or

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