IGCSE ECONOMICS

Sunday, 27 October 2013

Go through the Link, It will help you to understand about Obamacare(Reasons for recent US Govt. Shut down) and its impact on the economy as a whole!!!!

http://useconomy.about.com/od/healthcarereform/f/What-Is-Obama-Care.htm

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.

(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]

Question 3:

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

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

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

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Diwali Vacation Home Work for Grade IXA and Grade IXD

Diwali vacation Home Work for Grade IX A & D

Work Sheet Elasticity of demand

Question 1:

• Price elasticity of __________ is defined as the ___________ change in quantity demanded resulting from one percent change in the ___________of the good, other things remaining constant.

% change in quantity demanded

PED = --------------------------------------

Percentage is worked out as follows:

%change in quantity demanded = -------------------------- X 100

original quantity

% change in price = ------------------------------- X 100

original price

Question 2:

For problems 1–3: calculate elasticity.

1. Price is increased from $20 to $21 and quantity demanded falls from 10 to 9.

2. Price is lowered from $40 to $39 and quantity demanded rises from 7 to 8.

3. Price is lowered from $20 to $19 and quantity demanded rises from 100 to 105.

Question 3:

This worksheet looks at the measure of price elasticity of demand; how to measure it, what determines its value and what value it is to companies as a measure. To cover the worksheet fully, you should have a sound knowledge of the principles underlying supply, demand and the determination of price in a market.

Step 1 - E L A S T I C or INELASTIC?

Price Elasticity of Demand is a measure of how responsive demand is to a change in price. If a price change leads to a considerably bigger change in quantity demanded, we would consider the good to be responsive to a price change: hence elastic. If, however, a similar price change leads to a much smaller change in demand, we would consider it inelastic.
To get a more precise measure than this of the responsiveness to a price change we can calculate a value for price elasticity of demand. We use the formula:

PRICE ELASTICITY OF DEMAND =

percentage change in demand
percentage change in price

Use the formula above to calculate values of Price Elasticity for all the situations below:

Price		Quantity		% change in quantity demanded	% change in price	Price Elasticity of Demand
Initial	New	Initial	New	% change in quantity demanded	% change in price	Price Elasticity of Demand
25	30	100	40			1. ___________
40	70	120	90			2. ___________
200	220	80	64			3. ___________
50	75	150	135			4. ___________

In each case identify whether you would describe it as elastic / unit elastic / inelastic
1. _________________________
2. _________________________
3. _________________________
4. _________________________

Question 4:
What determines E L A S T I C I T Y?
As we have seen above it is important to a company to have an idea of the value of the elasticity of demand of its good or service as it will affect what happens to their total revenue as price changes. What should the company aim to do with their price in each of the circumstances below?

Elasticity	Change in price to increase total revenue?? (Increase or decrease price?)
Elastic
Inelastic
Unit elastic

If the company want to estimate the value of the price elasticity of their product, then they need to judge it against the following criteria:

· Proportion of income spent on the good - the lower the proportion of income spent, the more inelastic the good will tend to be

· The number of substitutes - the more substitutes a good has the easier it is for consumers to switch to another product if the price goes up

· The strength of the brand - the stronger the brand, the more inelastic the product will be

· The level of necessity or addiction - the more necessary or addictive something is, the more inelastic it will be

Judge the products in the table below to decide whether you think they will be elastic or inelastic:

Product	Elastic or inelastic?	Reasons?
A box of matches
A luxury holiday
'Heinz' baked beans
Computers - home users
Computers - business users
Cigarettes
Elastic bands

Inflation Worksheet

Question 5:

What is:

a) Inflation?

_________________________________________________________________________________

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

b) Consumer Prive Index?

_________________________________________________________________________________

·_________________________________________________________________________________

Question 6:

The Causes Of Inflation.

a) Cost -

_________________________________________________________________________________

b) Excess Demand -

_________________________________________________________________________________

c) Imported -

_________________________________________________________________________________

Question 7:
(4) Suggest Policies to Reduce Inflation.

a) Monetary Policy -

_________________________________________________________________________________

b) Fiscal Policy -

_________________________________________________________________________________

c) Price and Income -

_________________________________________________________________________________

d) External -

_________________________________________________________________________________

Saturday, 21 September 2013

CONSUMERS’ SPENDING, SAVINGS and borrowing

* TYPES OF PERSONAL INCOME

There are several ways of measuring personal income:

Gross personal income: This is the total personal income from all sources of an individual.
Disposable personal income: This is the amount which remains after income tax and national insurance contributions have been deducted from gross personal income. Disposable personal income = Gross personal income – Income Tax & NI contribution.
Real disposable personal income: This refers to the quantity of goods & services which disposable income can buy. It is the purchasing power of money income.

* WHY DO PEOPLE SAVE?

People save money because:

It is good social attitude.
It is helpful for future.
For any particular objective.
For security purpose.
Of increasing disposable income.
High rate of interest attract to save more.
They are attracted by different saving schemes.

* FACTORS INFLUENCE CONSUMER SPENDING

Increase in real income ( more real income more spending )
Amount of wealth held ( more wealth held more spending )
Easy borrowing ( easy borrowing, easy spending )
Hire-purchase facilities ( easy installments, more spending )
Rate of interest ( low rate of interest more spending )
Changes in the rate of income tax ( decrease rate of interest, more spending)
Changes in the distribution of income ( lower income household spend a greater proportion of their income then higher income households )

* EFFECT OF CHANGES OF INTEREST RATE

Changes in interest rate may have a number of effect.

A rise in the rate of interest may:

Increase savings
Discourage spending
Reduce investment.
Raise firms’ cost of production.
Raise the exchange rate.
Discourage borrowing.

A fall in the rate of interest may:

Decrease savings.
Encourage spending.
Increase investment.
Decrease the exchange rate.
encourage borrowing.

*HOW & WHY DIFFERENT INCOME GROUPS HAVE DIFFERENT EXPENDITURE PATTERN:

People spend more as their income increases; they also tend to save a large

percentage of their income. When incomes are very low, there will be no savings- the whole of the disposable income will be required to buy the basic necessities of life. As income increases, however, and the most urgent needs can easily be satisfied, it becomes possible to spend more & save more. When incomes increase in developed countries, much of the extra spending goes on durable consumer goods(e.g. cars, videos) and on a variety of services (e.g. holidays abroad).

*How does the pattern of spending change as living standard improve?

Pattern of spending changes mainly due to the increase of real incomes.

Food : As real incomes rise, people tend to buy a greater variety of better quality foodstuffs but share of income spent on food tends to fall.

Transport & vehicle : The rise in real incomes induce growth of private transport & vehicles.

Housing: The rise in real incomes increases home ownership, better housing facilities.

Durable household goods : As real incomes rise, people possess more and more durable consumer goods like air condition, T.V., fridge, mobile phones etc.

Services : As real incomes rise, people spend more on holiday, air travel, catering services etc.

IGCSE ECONOMICS

Sunday, 27 October 2013

Go through the Link, It will help you to understand about Obamacare(Reasons for recent US Govt. Shut down) and its impact on the economy as a whole!!!!

Diwali Vacation Home Work for Grade VIII-E

Diwali Vacation Home Work for Grade IXA and Grade IXD

Step 1 - E L A S T I C or INELASTIC?

Saturday, 21 September 2013

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