ECS1501 ASSIGNMENT 2 SEMESTER 1

ANSWERS OF ECS1501 ASSIGNMENT PREVIEW OF QUESTION 1 1. 3 Reference: Prescribed book PG 119 Law of demand which indicates that a negative relationship exists between the price of a good or service and the quantity demanded of it. 2. 1 Reference: Prescribed book PG 125 An important property of a demand curve is that it slopes downwards from left to right. This reflects the inverse or negative relationship between the price and the quantity demanded. This downward slope of the demand curve represents the law of demand. 1. 3 Reference: Prescribed book PG 119 Law of demand which indicates that a negative relationship exists between the price of a good or service and the quantity demanded of it. 2. 1 Reference: Prescribed book PG 125 An important property of a demand curve is that it slopes downwards from left to right. This reflects the inverse or negative relationship between the price and the quantity demanded. This downward slope of the demand curve represents the law of demand. 3. 2 Reference: Prescribed book PG 139 Complements are goods that are often used jointly (together), for example, fish and chips, pap (mealie meal) and boerewors, motor cars and petrol, coffee and milk, flashlights and batteries, DVD machines and DVDs, and cell phones and airtime. 4. 3 Change in price will cause a movement along the demand curve. 5. 4 Reference: Prescribed book PG 132 This means less of the good will be demanded at each price, and the position of the demand curve will shift to the left. 6. 4 Reference: Prescribed book PG 163 The law of supply, like the law of demand, can be expressed by means of a supply schedule. A supply schedule is a table that indicates the quantity of a product supplied at each price. 7. 3 Supply = 6 + 4 = 10 8. 1 Demand = 50 and supply = 20 hence a shortage of 30 9. 4 Reference: Prescribed book PG 189 If price of a product is set at too low a level. In this situation, buyers will demand a higher quantity than suppliers are willing to or plan to supply. Excess demand or a shortage will thus be created in the market.