Part A: Short Answer Questions

Answer all questions in no more than 150 words plus diagrams where applicable.

Question 1 (5 marks)

Explain the advantages and disadvantages of regulating a natural monopoly through (a) a marginal

cost pricing rule and (b) an average cost pricing rule.

Question 2 (5 marks)

What is a recessionary gap? How does the economy adjust to eliminate a recessionary gap?

Question 3 (5 marks)

How can a higher price of oil create inflation?

Part B: Essay Question (15 marks)

Answer the following question in no more than 500 words plus diagrams if appropriate.

The dependency ratio, the proportion of people in the age group 0 to less than 15 years, plus the

proportion of people in the age group 65+ years to the number of people in the age group 15 to less

than 65 is rising.

a. In terms of GDP per capita why might this be a problem? (5 marks)

b. Explain how changes in labour force participation may partially offset the fall in GDP per

capita. (5 Marks)

c. In the absence of a rise in labour force participation or of an increase the hours worked

per worker will we have to accept that GDP per capita will fall? (5 marks)

Still stressed from student homework?
Get quality assistance from academic writers!

WELCOME TO OUR NEW SITE. We Have Redesigned Our Website With You In Mind. Enjoy The New Experience With 15% OFF