Economics Test - 15 March 2016
You are required to do research that will be needed to complete an assignment in the second term. This assignment will cover Term 2 work. You may now use the internet for 1 hour to research the answers to the questions below. You must save your answers in a Word Doc and submit in on moodle before the end of the test period. You may NOT copy and paste any items into your Word Doc. All the text, tables and graphs must be original. Plagiarism scan software will identify cases in need of investigation. The work you are uploading today will count 30% towards Term 2 assignment.
1.Analyse the concept of utility. Explain in your own words what the relationship between diminishing marginal utility and demand is. Use diagrams and table to illustrate.
2. How does the elasticity of demand differ from one good to the next? Using diagrams for different products, explain why demand curves will have a different gradient.
3. How can price elasticity data be used to make decisions? Who uses it? Give examples using different product scenarios.
4. Finally, explain how petrol and Apple Iphones are such different products (not in terms of their physical characteristics but in terms of how consumers make decisions when faced with price changes).