1971-02-28 — Page 14

頁二集蒻匹第日四初月二年亥辛歷夏 WAH KIU YAT PO

有教僑華

1971 英文中學會考試題預習專欄

新先出版社主編 SUNLIGHT

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經濟及公共事務科 (十八)

Keonomic and Pubiic Affairs

Lesson 18

28th Feb.. 1971

Answers -to Exercise 17

1. What is meant by marginal utility

How does the Law of Diminishing Marginal Utility operate. ?.

Answer: The marginal utility of a good

to a person is the extra contentment or satisfaction due to an extra unit flow of consumption of that good by the person concerned.

Scarcity

One important aspect that the Economist deals with now is perhaps the allocation of resources.. prevails when human beings cannot satisfy their wants, Imagine if everything were free, the shops would be swept bare in no time, there would still be discontented people who bad not got there in time to collect al1 they would have liked. Therefore, most of our wants, and nearly all of those which refer to the necessities of phy sical health or comfort, cannot be satisfied once for all. It needs a continuing flow rather than a stock of the appropriate good,

With reference to the marginal utility of individual desirable good, we have to choose, then, not between having, say, cigarettes and no milk or milk and no cigarettes, but betweel different mixtures of them. When add- ing up the weekly shopping list, one often finds the total expenses excesda the weekly house-keeping money. In order to get the most comfort, content- ment or satisfaction out of the restr icted expenditure, one does not ordin- arily cross out certain items right off the list, one will reduce the quantit- des of certain goods one intends to consume a

we now are going to consider the

Law of Diminishing Marginal Use

which states that if a person his (weekly) consumption of a commodity only, the marginal utility to him of that commodity will fall relatively to the marginal utility of other commodities that he uses regularly. This will become more prominent if he reduces his consum- ption of other commodities in order to increase his consumption of that commed- ity. This is so because the marginal utilities of other commodities to him rise relatively to that of the commodity concerned, assuming the person's other circumstances do not change.

Let us refer to a daily example to prove its authenticity, To receive five taels of tea a week is better than to receive four taela, six taela is better.

and so on. But according to

to the Law of Diminishing Marginal Utility, the marginal utility of six taela of tea is the increase in total utility added by the sixth tael of tea e-m, which is likely to be less than that added by the fifth tael of te

Another example,

when connects with the actual pricing of tea, will present us a better picture. A man may be ready to buy a cattie of tea at the price of $10 if this is his first cattle, or if his supply of tea at home is small. But for a second cattle he might pay $9 for it, for a third $7.80, and so on. This 1s so because each additional unit has less utility for him than the former one.

înerelore, we ought to use

sources efficiently because the consequ ence of any failure to do so is that our

ability to meet economic wants is rem duced, f

Even more wants so unsatisfied The and our level of living declines. studying of economics therefore enables us to determine how resources should be allocated as we must economize due to the scarcity of resources.

Distinguish between amount demanded: and a

Answer :- The quantity

change in the

ge in demand.

any product pur- group of buyers

chased by a buyer or in period of time depends on a wide range of circumstances.

But perhaps

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most important of all, a buyer's chole for a product at various priceà cha

is likely to be affected by u

(a) the price of the product,

(b) the income level of the buyer

himself,

(e) his wealth,

(d) the amount of this and other

products he has already posse essed, and

(s) the prices or other related

producte.

日期星日八廿月二年一七九一曆公年十六國民華中 育教僑華

Therefore, a study of the market behave lour of the buyers will become extremely complicated. However, it will be easier in dealing with the problem when we take only the price of the product as a chang ing factor (variable)

-), the others Being

constant.

Generally, the amount demanded of a product will be inversely proportional to its price, which means, more of it will be demanded at a lower price and

leas will be demanded * a higher price. When

we expressed the relationship. bë- tween the price charged and the quantity demanded of a product graphically, we will find that the graph is sloping down- Warus from the left to the right as shown

PRICE

105

AMOUNT · · DEMAND ED

Figure 1.

Point A shows that at a price of $20, 100 units would be demanded; point B, that at a price of $10, 150 units would be demanded, and so

A smooth curve can be drawn by joining the successiva points together.

Lon

So we can derive a

concept

The amount demanded 18 the quant- ity of sales of a product, while the relationship between the price charged and the amount demanded is known as the demand for the product or the demand function for that product.

When there is a change in the demana

it implies that at an a Di cauct

To

price the amount demanded has become different from what it was before. illustrats, with a price of $20, 1 the amount demanded is now 200 units (A,) or 50 units (A2), whereas formerly was 100 units (A). Such change.

E new demand cu shown graphically as as shown in Figure II.

PRICE:

AMOUNT Figure II

A change in the amount demanded can occur without a change in demand, provided the price is altered. Such a change can occur when the price alone is shift, for example from A to B in figure I, Às a result, only the horizontal entry the demand curve Dos changed.

hand, On the other

change in demand would not occur oscause of a change the price of the product. It may occur as a result of a change in another factor such as income levels, the prices of

The change is competing products, etc. indicated as new demand curve (D1 or

Da in place of Do) as shown in Figurs II.

Exercise LU

What is meant by elasticity or qemanu How do the characteristics of individ» ual products affect the elasticity demandi

II. Select the one that BEST answers the question or completes the staten

We termed economics under social sciences because

it investigates the laws of morality

and formulates rules of conduct.

it is a record of past events and novements, their causes and inter- relations.

is deals with a scientific study of human behaviour and social action with an object to satisfy human desires..

d. it deals with the phenomena of

inaminate matters »

it deals with tables and graphs to facilitate the measurements of money sources.

Division of labour is commonly defined.

Vahawa "production,

the

operation of a piece of article through specialized units. shift system

the manufacture of a piece of good with everyone exerting the same amount of work.

the control of labour over product- ion and distribution.

The role played by the economist is just like thät of

a. the mechanic who repairs an old

motor.

. the designer who conceivea дем

one'.

the navigator who directe or managea a ship.

the interpreter who explains or makes things clear..

the engineer who carries through a scheme or undertaking.

The economist is confronted with some difficulties which do not exist in the

of

the physicist. For

the physicist can investigate with- out having to l be concerned about the prejudices and attitudes of the rest of the community. The economist must seek the truth, when from all sides he is under pressure to defend

causes...

most people do not pretend to be physicists. But everyone feels he is an economist because economics is always regarded as only common sense applied to business experience. the physicist can do without stat= istics and tables while on the other hand, table and graphs a are absolutely indispensable to the economist. physics experiments in-economies can be done in the laboratory while ex- periments in economics find no room to grow.

the development of economic thought and institutions is so diversified and complicated that it makes the task more difficult.

amount of natural resources 1s

constant and unchanging. subject to exhaustion.

dependent upon the level of technology.

rregular and fluctuating.

exhaustible and infinite.

Which of the following statements. rightly illustrate the effects brought forth by inflation 7

1. Inflation leads to a rapid increase

in production.

Inflation discourages saving and consequently making industrial in- vestment extremely difficult. Inflation leads to a fall in exports and to an increase in imports of a country?

When anflation prevails, the volumE of aporte of a country is reduced, while her exports will expand in volume

Inflation means the income of stock holders will decline.

8.1, 2.

2, 3

d. 4, 5, 5, 1,

Then a factory experiences an increase

productivity, we imply that.

a greater volume of goods is prom

duced.

the rate at which goods are produced is reduced.

more goods can be produced in less time or by a smaller number of workers ¿

the process of production is

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