Econ

4429 Words Apr 19th, 2012 18 Pages
ECON 11026 Assignment Item 1 . S0183732
Part A
Q1ai) Article can be found in the following website : http://www.skynews.com.au/businessnews/article.aspx?id=738928&vId= The article ‘ Strong jobs figures put rate cut in doubt’ described that there is an increase in employment in the last one month which might help in putting hold to rate cut by Reserve Bank of Australia. There are positive signs in Australian job market with increase in 44000 employed people showing signs of recovery and better production levels. This will also increase private consumption giving rise to increased demand.
Q1aii) This news article describes tradeoffs between interest rate cuts, inflation rate and unemployment
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(McTaggart 2010) The point on the PPF at which goods and services are produced in the quantities which provide the greatest possible benefit .Hence, when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit, we achieved allocative efficiency. Hence, we must measure and compare costs and benefits.
The diagram drawn above indicates the marginal cost and marginal benefit curves. The marginal cost of a good is the opportunity cost of producing one more unit of it. We calculate marginal cost from the slope of PPF.As more sunscreen are being produced ,the PPF gets steeper and the marginal cost of sunscreen increases. When the country is producing 150kg of food,75 litre of sunscreen is being produced at its best efficiency quantity, that is the quantity which uses resources efficiently because the marginal benefits intersects its marginal cost .

1biii) Calculate the opportunity cost of producing 1kg of food and the opportunity cost of producing 1litre of sunscreen.
Along the PPF, there are only two goods, so there is only one alternative forgone: in this case, either food or sunscreen. It is given that when the country produced 200kg of food per

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