Diwali Vacation Home Work for Grade VIII-E

Question 1:
Read the following Case Study and answer the following Questions:

A GERMAN TRAVEL COMPANY CONSIDERS ITS FUTURE

A German travel company decides to stop selling holidays in Italy and instead to offer holidays in a new destination. This is the Maldives, a group of island in the Indian Ocean, famous for their long hours of sunshine and sandy beaches.

Tourism is a fast growing industry. Not all families, however, are able to go on holidays whether at  home or abroad. Most of those who take holidays would like to have more holiday breaks.

a  1. What evidence is there in the passage of scarcity?                      (3)

    2.  Using examples identify three factors of production involved in providing holidays in the Maldives?                                                            (6)

c  3. (i) Explain the difference between economic goods & free goods.   (4)

(ii) Identify a free goods from the passage.                                   (1)

d  4.     Explain the relevance of opportunity cost for a travel firm in deciding how to use its resources.                                                                   (6)

Question 2:

A.     Using the information given in the table below, fill in the blanks and Show your calculations for the following:                                                                         [10]

     (a) Fixed cost for 0 units of output per week.

     (b) Variable cost of 6 units of output per week.

     (c) Total cost of 3 units of output per week.

     (d) Marginal cost of 5 units of output per week.

     (e) Average cost of 8 units of output per week.

Units of output (per week)	Fixed Costs    $	Variable costs   $	Total Cost       $	Marginal Cost     $	Average Cost       $
0		-	1000	-	-
1		350			1350
2			1560
3		740		180
4		1000			500
5			2400		480
6	1000			600
7			3850		550
8		3960

B. The price of a firm’s product is $5. It sells 1000 units.Calculate the firm’s total revenue (TR) and average revenue (AR). (Show your calculations)                           [2]

C.  Singapore Airlines cancelled thousands of flights between April and August 2000 because of crew shortages, bad weather and technical problems with aircraft. There was also a 3% reduction in flights because pilots refused to work overtime.

(a) Explain the difference between a fixed cost and a variable cost.      [4]

(b) Discuss whether the cancellation of a flight would have affected the fixed and       variable costs of Singapore Airlines.                                                         [6]

(c) What is meant by ‘the principle of profit maximisation’?                [3]

Question 3:

Q. A. Explain advantages & disadvantages of market economy.  [10]

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Q.B. Distinguish between free market & Mixed economy. [6]

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C. Why mixed economy is considered as the best economic system? [8]

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