just net to explain the answer


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just net to explain the answer 1 answer below » just net to explain the answer Document Preview: Assignment Questions
Question 1 – 10 marks
Part A
Ethanol (barrels per day)
Food crops (tonnes per day)
70
0
64
1
54
2
40
3
22
4
0
5Australia produces ethanol from sugar cane, and the land used to grow sugar cane is used to grow food crops. Suppose that Australia’s production possibilities for ethanol and food crops are as in the table.
If Australia increases its production of ethanol from 40 barrels per day to 54 barrels per day, what View complete question » just net to explain the answer Document Preview: Assignment Questions
Question 1 – 10 marks
Part A
Ethanol (barrels per day)
Food crops (tonnes per day)
70
0
64
1
54
2
40
3
22
4
0
5Australia produces ethanol from sugar cane, and the land used to grow sugar cane is used to grow food crops. Suppose that Australia’s production possibilities for ethanol and food crops are as in the table.
If Australia increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of an additional barrel of ethanol? (1 mark)
Does Australia face an increasing opportunity cost of ethanol? What feature of Australia’s PPF illustrates increasing opportunity cost? (1 mark)
Part B
The table sets out the demand and supply schedules for banana.
Price
(dollars per box)
Quantity demanded
Quantity supplied
(boxes a week)
6
500
4000
5
1000
3500
4
1500
3000
3
2000
2500
2
2500
2000
1
3000
800
Draw a graph of the market for banana. What are the equilibrium price and quantity? Explain why. (1 mark)
If the price of banana was $1.50 a box. What would be the situation in the banana market (shortage or surplus)? Explain why and how the price and quantity would adjust. (1 mark)
Suppose a cyclone destroyed some banana farms in QLD and the quantity of banana supplied decreased by 500 boxes a week at each price. Explain what would happen to the market supply and demand and how would the equilibrium price and quantity adjust? Illustrate the changes on your graph. (3 marks)
Suppose a cyclone decreased banana supply by 500 boxes a week at each price. But at the same time the demand for banana increased by 500 boxes a week at each price. Explain what would happen to the market equilibrium price and quantity? Illustrate the changes on your graph. (3 marks)
Question 2 – 10 marks
Part A
Price (dollars per night per room)
Quantity demanded (no. of rooms per night)
200
10
250
9
300
8
350
400
6
4 A tour agency’s demand schedule for hotel rooms is… Attachments: Assignment-Qu….docx View less » Apr 21 2014 04:13 PM

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