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Micro-economic concepts · Part 2 of 3
6 exam-style questions with model answers, plus 6 quick multi-choice questions — every question on this part of the standard, grouped by the 2 pages of notes they come from.
Write a full answer before you reveal the model one. That comparison is where the learning happens.
State the law of diminishing returns and explain what happens to total product while marginal product is falling but still positive.
Using a diminishing returns model, explain in detail why the supply curve slopes upwards.
A small manufacturer with one production line is deciding how many staff to employ on a shift.
Using production data and a model, justify the implications of diminishing returns for this producer's staffing decision.
A 20% rise in price causes quantity supplied to rise by 5%.
Calculate the price elasticity of supply, state whether supply is elastic or inelastic, and give one reason supply might be this responsive.
Explain in detail why the price elasticity of supply of apples is very low immediately after harvest but much higher over a period of several years.
A regional council is concerned about rapidly rising house prices after a surge in demand for housing in its area.
Using elasticity of supply data and a model, justify the implications of price elasticity of supply for the council's policy response.