Stated below are 8 Economic Principles

Tutorial 1 Week 2 Question 3 (11 marks)
Stated below are 8 Economic Principles that we have covered in this unit. Select any 2 (out of 8) and explain the application of the principle by providing real life examples. Your explanation of the principle is worth 3 marks. An appropriate example is worth 2.5 marks. (5.5 x 2 = 11 marks)
Principle 1: People face trade-offs. Principle 2: The cost of something is what you give up to get it. Principle 3: Rational people think at the margin. Principle 4: People respond to incentives. Principle 5: Trade can make everyone better off. Principle 6: Markets are usually a good may to organize economic activity. Principle 7: Governments can sometimes improve market outcomes. Principle 8: A country’s standard of living depends on its ability to produce goods and services.
Tutorial 2 Week 3 Question 3 (7 marks)
Draw a graph of market equilibrium. Explain what the equilibrium point means (3 marks). On the same graph, draw a condition of surplus (1 mark). Discuss what surplus means by answering the following sub-questions. a) Describe the behavior of buyers and sellers in times of surplus (1.5 marks). b) From your surplus price describe what will happen to the market price (1.5 marks).
Tutorial 4 Week 5 Question 3 (7 marks)
Compare and contrast Accounting Profit versus Economic Profit (4 marks). Can firms who earn zero economic profit continue to operate (1.5 marks)? Provide an explanation for your answer (1.5 marks).
Tutorial 5/6 Week 6/7 Question 3 (7 marks) Describe and compare the level of price control within the four market structures (4 marks). Identify the market structure/s where a firm can be a price-maker (1 mark). If the firm is a price-maker, then the company will always be profitable. Explain why you agree or disagree with this statement (2 marks).

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