nyjc h2 economics tutorial questions and answers topical (all topics)

JC1 and JC2 H2 Economics 2013 NYJC Economics Tutorial TOPICS PAGE Introduction to Economics Data Response Skills 1 Introduction to Economics Essay and Case Study Skills 9 Scarcity, Choice & Opportunity Cost Nature & Scope 28 Resource Allocation in Competitive Markets Demand & Supply (In Product Market) 34 Resource Allocation in Competitive Markets Elasticity of Demand & Supply 67 Key Economics Indicators National Income Accounting 122 Key Economics Indicators An Introduction to Macroeconomics 139 How The Macroeconomy Works Keynesian Theory 143 How The Macroeconomy Works Government Policy Tools 163 How The Macroeconomy Works Economic Problems - Inflation 179 How The Macroeconomy Works Economic Problems – Unemployment 221 How The Macroeconomy Works Economic Problems – Economic Growth 253 International Economics International Trade, Finance & Globalization 289 Firms & How They Operate Theory of Production and Costs; The Perfectly Competitive Market; The Monopolist 377 Firm’s & How They Operate Monopolistic Competition; Oligopoly 407 Market Failure & Government Intervention 450 www.KiasuExamPaper.com 1 The Monopolist & HHHowwwww TTTTTTTThehheeheyyy y Oppppppppereeerererere aaataaaaaa e Mooonooooooopoppopopopopppolisttticcccc CCCCCCComomomomomomomommpepepepepepepeepep titititititiionnononnonononnn; ;; ;; ;; OOOlOOOO igggopoloolly 4044 777 et FFFaaailurerererererereree &&&& GGGovovovovovovovovvo ernmnmnmmnmnmnmmenenenenneneenentttttttt InInInnInInnnI tetetetetetetet rvrvrvrvrvrvrvrvenenenenenenenenene tititititittitit ooonooo 454545000

Nanyang Junior College 2012 - 2013 H1 & H2 Economics © 1 1.1 Numbers (a) Absolute and Relative Absolute – r e f e r s t o t h e a c t u a l s i z e / v a l u e o f a c e r t a i n v a r i a b l e a n d w h a t happens to the actual size/value over a period of time. Example: Pei Ling’s Mathematics marks rose by 5 from 25, while Wei Xiong’s marks rose by 8 from 80. Relative – refers to the size / value of one variable with regard to some aggregate or other variable and how this position changes over a period of time. Example: Pei Ling’s marks rose by 20%, while Wei Xiong’s rose by 10%. NOTE: Data can show a larger absolute change but a smaller rela tive change. In “absolute” terms Wei Xiong showed a larger improvement, but in “relative” terms Pei Ling’s improvement was more significant. (b) Index Numbers Index Numbers (or indices) are a common tool that economists us e to measure the relative changes of variables over time. It is espe cially useful when the absolute or ‘raw’ data becomes very unwieldy or when absolute comparisons are not necessary. Example: We can ‘index’ the changes of the waist size of a few individuals over time, so that more valid or ‘fair’ comparisons can be made. Waist (cm) January March June Person A 40 44 48 Person B 60 63 69 Person C 80 86 94 Waist (Jan =100) January March June Person A 100 110 120 Person B 100 105 115 Person C 100 107.5 117.5 Whose waist grew the most? Person A Table 1 Table 2 NYJC Introduction to Economics: 1. Data Response Skills 201 JC1 H1 & H2 ECONOMICS www.KiasuExamPaper.com 2 10000000 1000777.555 grrrrrrrrrrreeewee tttttttttthehehehhhhhhhehhhhh mmmmmmmmmmmmmooosoooooo t??????????????

Nanyang Junior College 2012 - 2013 H1 & H2 Economics © 2 NOTE: x Indices are used to measure changes in many variables. They ar e most frequently applied to measure changes in prices of groups of th ings. The most common being the Consumer Price Index (CPI), which measure s the changes in the prices of a selection of consumer goods. Measuri ng the change in the CPI can give us an indication of how fast consume r prices are changing. If the changes are increasing over a period of time, then we have an indicator for the rate of inflation. x Although Indices are a quick and fair way of measuring changes (and rates of change), they are not useful when making comparisons in absolute terms. Using the data presented in figure 1 answer the following questions: Resale HDB flats= 102.8 -110 x 100 Private homes= 122.1 – 170 x 100 110 170 = -6.5% = -28.2% First quarter 1999 was the base year because the index was 100. No. The index is the same but the actual prices are not be the same. We can only conclude that prices are the same unless we are giv en the actual data which states so. Figure 1 Index of House Prices by house type Calculate the approximate change in the prices of each of the t wo housing types from the first quarter 1996 as compared to the first quarter 2006. The data does not state what the ‘base’ period is. In your opinion which period do you think is the base period? Why? In Q1 1999, the index for Private House prices and that of Resa le HDB flats is the same. Can it be concluded that Private Houses and Resale HDB flats we re sold, on average, at the same price? Explain your answer. www.KiasuExamPaper.com 3 samamamame ee eee buuutt thhhhhhe eeeeee acacacacactutututututualalalalalal ppppppriicess ararareee nononot t t bebebe ttthehehe sssam deeeeee tttthahahahahahahhh tt tttt prprprriciccicicices aaaaaarererererere tttttthehheheheheh ssssssamamamamamame unlleeesssssss wwweee ararareee g

Nanyang Junior College 2012 - 2013 H1 & H2 Economics © 3 1.2 Graphs Graphs represent a quantity as a distance on a line. The main p oint of a graph is to enable us to visualise the relationship between 2 variables. T w o t y p e s o f relationship can be observed: Positive – when the 2 variables change in the same direction. Negative – when the 2 variables change in the opposite direction. When looking at graphs you should consider the following patterns: x Variables that move in the same direction. x Variables that move in the opposite direction. x Variables that have a maximum or a minimum x Variables which are unrelated. Types of Graphs: (a) Scatter Diagrams This type of diagrams (graph) is used to reveal whether a relat ionship exists between two variables. Yes. From the line of best fit, we can see a negative relations hip between inflation and unemployment. The line is downward sloping depicting an inv erse relationship between inflation and unemployment. ‘05 ‘04 ‘03 ‘02 ‘01 ‘99 ‘98 ‘96 ‘97 ‘95 Unemployment Inflation 0 Figure 2 Each of the 10 dots in the diagram shows the combination of the inflation rate and the unemployment rate for a single economy in a particular year. The 10 dots imply that we have data from 10 different years. Does the scatter diagram (fig 1) reveal a relationship between inflation and unemployment? www.KiasuExamPaper.com 4 d unemplppp oyment.

Nanyang Junior College 2012 - 2013 H1 & H2 Economics © 4 (b) Time-Series Graphs & Data These types of data chart the changes in a variable over time. I t i s u s e d t o examine patterns or trends or changes in trends. Time-series data involve the identification of trends and the recognition of changes or exceptions to the trends. Rates of change often can also be inferred and calculated. Generally increasing over the years except for the quarter lead ing to June 99 and a slowdown in the increase for the quarter leading to Dec 99. Upward trend with lowest negative growth in Jun 98 and highest growth in Sep 99. % increase in GDP per capita= [(44666-37520)/37520] * 100%= 19.05% Singapore GDP per capita (Current Market Price) Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 S$ 37520 35161 35440 39784 37130 37976 38599 42852 44666 Figure 3 Table 3 Describe the trend of the quarterly changes in the “Real GDP” (Fig 3). Calculate the percentage increase in GDP per capita from 1997 to 2005 (Table 3). www.KiasuExamPaper.com 5

Nanyang Junior College 2012 - 2013 H1 & H2 Economics © 5 (c) Cross-sectional data This type of data shows how figures are ‘built’ up. They are useful to show the components of any single figure. Cross-sectional data presented in table