11 ECONOMICSQuizzes

PRODUCERS1. You own a small airline. Which sector of

the Economy are you?2. You own the company alone. What kind of

business structure do you have?3. What are the advantages and

disadvantages of this business structure?4. You want to expand and invest in some

new & bigger air planes to carry more passengers. Suggest 4 sources of finance

5. You decide to offer package holidays instead of just air travel. What kind of business expansion is this?

PRODUCERS CONTINUED.1. You decide to form a private company with your

best mate Tim. What are the advantages and disadvantages of this business ownership?

2. 3 months later you find your business is getting a bit hard for you and Tim to manage. Which management structure would be best for your business?

3. Several big airlines have entered the market and you are finding competition a bit tough. You enlist the services of Sarah’s Advertising and Marketing Firm. What services can Sarah’s firm provide you with?

4. A year later business is booming, explain how you and Sarah are interdependent?

5. 4 years later you have a fleet of 10 aircraft, 2000 staff and business is booming but you notice that some of your costs seem to be rising more than your profit? Explain why?

PRODUCERS 1. State the factors of production & their

rewards2. Define dividends3. Describe the difference between a merger

and a takeover?4. Define Productivity5. Explain how division of labour and

specialisation lead to increased productivity?

6. Describe Economies of Scale.7. Why are there now more people employed

in the Tertiary Sector than Primary?8. Name 4 producer goals

SURPLUS…..The market for ACDC Concert Ticketsis in Surplus. A) Show this & then

B)Explainhow the market will return to equilibrium.

Remember:IdentifyExplainRelate

SURPLUS…ANSWERSA)See WB/NotesB)I: A surplus is where the price is above

equilibriumand the Quantity Supplied exceeds the

QuantityDemanded.E: The Price in the market will fall to clear

excesstickets. When the Price decreases, QuantityDemanded will increase and Quantity

Supplied willIncrease until Equilibrium is reached. R: The market will clear when the QuantitySupplied is equal to the Quantity Demanded.

EQUILIBRIUM1. Define a Market2. Show a market in Equilibrium3. Show a market with Excess Demand4. Show a market with Excess Supply5. State the other name for Excess

Demand6. State the other name for Excess

Supply

EQUILIBRIUM (ANSWERS)1. A market is a place or situation where

buyers and sellers meet to exchange goods or services.

2. See diagram3. See diagram4. See Diagram5. Shortage6. Surplus

EQUILIBRIUM AGAIN!1. Define Equilibrium2. If Excess Demand, the price will need

to………?3. If Excess Supply, the price will need

to………..?4. Show the Market for Jonas Brother’s CD’s inEquilibrium. 5. Show the (likely) effect of the price of MileyCyrus CD’s decreasing in Price6. What has happened to the equilibrium

Price…….?

ANSWERS1. Equilibrium is where supply = demand. Or where all that consumers are willing andable to demand is supplied. There is no

surplusor shortage.2. Increase3. Decrease4. See WB5. See WB – Assuming is a substitute –

Decrease inDemand.6. It will decrease, as will equilibrium Quantity

THE MARKET FOR HIGH SCHOOL MUSICAL 3 TICKETSFor each of the following events draw up the

market and show the effect on either S or D The Price of Tickets Falls from Pe to P1 Zac Effron is caught in a drug and racial

abuse scandal The Federal Gov’t decreases the min wage

for Actors HSM 3 receives 10 Grammy nominations Tax cuts are announced for youths The Federal Gov’t announces stricter

regulations for employment of young people

MORE SUPPLY & DEMANDThis time for Twilight – New Moon1. Kristin & Rpatz are backtogether, then

split no together…no split…2. The US gov’t grants the production

unit a subsidy3. Stephanie Meyer goes to court and

gets a higher royalty4. True Blood win’s more Emmys5. Rpatz is voted most sexiest man ever!

TWILIGHT S & D ANS1. Demand Increases – Pe & Qe ↑ (Tastes

& Preferences)2. Supply Increases – Pe ↓ Qe↑ (Subsidy)3. Supply Decreases – Pe ↑ Qe ↓ (Cost of

Production Increases)4. Demand decreases Pe & Qe ↓

(Substitute)5. Demand increases (Tastes and

Preferences)You are being manipulated!!!

DEMAND1. Explain the Economic Problem. (Hint link Limited

Means, Choice, Scarcity, Opportunity Cost & Unlimited Wants

2. Budget Catfood is an example of which type of good?

3. Demand for these types of good increases as your income increases?

4. Define disposable income.5. State the law of demand6. Explain the law of demand7. I ate six chocolate truffles stands for?8. Show an increase in quantity demanded9. Show a increase in demand10. What is the difference?

DEMAND ANS1. The economic problem is Scarcity. This means that humans

have Unlimited Wants relative to Limited Means (time, money and skill). So they must make a Choice on how to allocate their Limited Means. Each choice results in a Opportunity Cost. This means the next best option foregone.

2. Inferior3. Luxury, Normal4. Income after Tax5. As price increases, quantity demanded decreases, price

decreases quantity demanded increases. Ceteris Paribus.6. Consumers are motivated to try and get the best value. When

the price is low it is more affordable so Quantity Demanded will increase where if the price is higher it is more expensive so Consumers will decrease their quantity demanded.

7. Income, Advertising, Substitutes, Complements, Tastes & Pref.8. Both *8 & 9- See WB9. Increase in Quantity Demanded caused by increase in price.

Increase in Demand caused by a change in non price factors. E.g Increase in advertising.

SUPPLY1. Define Market Supply2. State the Law of Supply.3. Explain the Law of Supply4. List the non price factors of supply5. Show a increase in Supply6. Show the effect of a price decrease7. Define a Tariff8. Define a Quota9. Show a decrease in Supply10. Show an increase in Quantity Supply

DEMAND AND SUPPLY FOR CELL PHONES Show effect of following:1. Increase in price of text messages (complement)2. New signal towers need to be built to maintain current

coverage3. Cell phones go up in Price4. Gov’t gives a subsidy to Cell phone producers5. Cell phones said to give you cancer6. New Moon features lots of cell phone use, making it

look cool.7. Text bulling leads to a ban on cell phone use by under

16 year olds.8. Successful wage negotiations by cell phone

manufacturing workers leads to increase in their wage. 9. PAYE is increased in all brackets – 25%, 38%, 45%10. Company tax decreased in NZ.

SUPPLY ANS1. Total of all Individual Supply at each and every price & or

horizontal summation of all individual quantity supplied at each and every price

2. Price Increases, Quantity Supplied Increases, Price decreases, Quantity Supplied decreases

3. Producers motivated by profit. A higher price means more profit to compensate for a producers opportunity cost. What they could be doing if not increasing production. An increase in price makes producers more willing and able (cover extra costs) to producer/sell/supply more.

4. Costs of Prod, Related Good, Tech, Productivity, Legal, Trade, Environmental, Cultural, Political

5. Q 5-6,9-10 See WB6. Tax on imported Goods7. A limit on the amount that can be sold/Exported/Imported

Interdependence between SectorsDraw up a 5 Sector Circular flow showing onlymoney flowsList the 5 Sectors and fully describe eachincluding the relationship they have with

othersectors.e.g. Households:All households (consumers) in an economy. - Producers – G & S, Expenditure, Resources,

Income- Financial – Savings, Loans (credit) Interest- Gov’t – Taxation, Benefits (Transfer

Payments)

Complete (2007)

Flows…. (2007)1. Name a money flow from Producers to

Banks2. Explain how this flow is affected by

more investment by firms.3. Name a money flow from Government

to Households 4. Explain how this flow is affected by

more unemployment in households.

Effects of a change & Flow On Effects Gov’t increases company tax Manufacturers increase production Gov’t increases income tax Increase in Transfer Payments Increase in Tourism to NZ Increase in Exports Increase in value of NZ$ (appreciation) Payment for Carbon Credits required

(ETS) Increase in the Minimum Wage Increase in House Prices

MORE EFFECTS & CHANGES Increase in Fonterra payouts to farmers Increase in interest rates Kiwisaver Introduced Oil exploration begins in Southland.

GOV’T INCREASE INCOME TAX↑in income tax will make Consumers Disposable

Income↓, &

the Government will collect > income tax revenue Consumers will d < g & s, switch to inferior

products, buy < luxuries, save < Producers sell less g & s b/c consumer

expenditure has ↓. → < production, < Investment, < Employment (poss cut back on existing),< Revenue , < profits

Financial receive < savings (b/c h/h ↓savings) so lend out < → < revenue, profits

Gov’t received > income tax, may be able to repay debt, ↑ ↑ Gov’t expenditure inc transfer payments. Might receive < income tax in future if unemployment increases, also < GST

Overseas < D for Imports, < Import Payments,

PAYMENT FOR CARBON CREDITS REQUIRED (ETS)

This means the introduction of the Emissions Trading Scheme.

Firms who emit CO2 > allowed will have to buy credits (COP

↑), firms who emit < CO2 than allowed will be able to sell\

credits (COP ↓). Likely prices for most G & s will ↑

H/H - ↓ D for G & S, ↓ Savings

Prod - ↑ Prices (Supply will ↓) to pay for ↑ COP, Invest CO2

reducing tech.

Financial - ↑ Profits – (↑loans for Firms), but will receive < savings

from Consumers, maybe ↑ Credit to Consumers to pay for ↑ Prices

Govt – Regulating ETS may mean < Expend on other areas of Gov’t exp. <Consumer Exp & Incomes , < Taxation

Overseas – Less Imports & Exports – “Food Miles” – Less D, Prices Increase in NZ = Export Prices Increase