AS91401 Demonstrate understanding of microeconomic concepts

Question 1

Phillip is a university student who enjoys extreme sports. One activity he particularly enjoys is sky diving.

Question 1.a

The table below shows Phillip’s utility for sky dives over a year (measured in dollars).

Complete the table by writing the missing numbers in the space provided.

Question 1.b

The table below shows Phillip’s annual demand for sky dives.

Use the table you completed in question 1 to help you complete Phillip’s demand schedule for sky dives by writing the missing number in the space provided.

Question 1.c

On the axes below draw Phillip’s demand curve for sky dives each year using the demand schedule above.

Question 1.d

Provide a detailed explanation about how marginal utility causes Phillips’s demand curve for sky dives to slope downwards to the right. In your answer you should refer to:

the law of diminishing marginal utility
the optimum purchase rule
specific data and economic models from page 2

Question 2

In the summer, Phillip likes to go to the dairy when he has a break between lectures at university and buy something to cool off.

At the beginning of the semester, ice creams cost $4 and slushies cost $2. However, the price of ice creams drops to $2 in the middle of the semester.

Question 2.a

In the columns provided calculate the MU per dollar for both ice creams (before and after the price drop) and slushies.

Question 2.b

If Phillip has a $10.00 budget to spend, Table 3 to identify the quantities of ice creams and slushies Philip will buy when ice creams are at their original price ($4.00):

Question 2.c

Assuming he is a rational consumer, explain Phillip’s consumption combination of ice creams and slushies at the original price. Refer to your decision-making process and specific data from Table 3.

Question 2.d

If Phillip has the same budget of $10.00 to spend, use Table 3 to identify the quantities of ice creams and slushies that Phillip will buy after the price of ice creams falls to $2.00:

Question 2.e

On the axes below sketch the effect of the decrease in price of ice creams on Phillip’s demand for ice creams AND Phillip’s demand for slushies.

Question 2.f

Justify the effects of the decrease in price of ice creams on Phillip’s demand for ice creams.

In your answer you should refer to:

the Law of Demand
specific data from Graph 2

Question 2.g

Justify the effects of the decrease in price of ice creams on Phillip’s demand for slushies.

In your answer you should refer to:

the economic relationship between the two goods
specific data from Graph 3

AS91401 Demonstrate understanding of microeconomic concepts

Question 1

Phillip is a university student who enjoys extreme sports. One activity he particularly enjoys is sky diving.

Question 1.a

The table below shows Phillip’s utility for sky dives over a year (measured in dollars).

Complete the table by writing the missing numbers in the space provided.

Question 1.b

The table below shows Phillip’s annual demand for sky dives.

Use the table you completed in question 1 to help you complete Phillip’s demand schedule for sky dives by writing the missing number in the space provided.

Question 1.c

On the axes below draw Phillip’s demand curve for sky dives each year using the demand schedule above.

Question 1.d

Provide a detailed explanation about how marginal utility causes Phillips’s demand curve for sky dives to slope downwards to the right. In your answer you should refer to:

the law of diminishing marginal utility
the optimum purchase rule
specific data and economic models from page 2

Question 2

In the summer, Phillip likes to go to the dairy when he has a break between lectures at university and buy something to cool off.

At the beginning of the semester, ice creams cost $4 and slushies cost $2. However, the price of ice creams drops to $2 in the middle of the semester.

Question 2.a

In the columns provided calculate the MU per dollar for both ice creams (before and after the price drop) and slushies.

Question 2.b

If Phillip has a $10.00 budget to spend, Table 3 to identify the quantities of ice creams and slushies Philip will buy when ice creams are at their original price ($4.00):

Question 2.c

Assuming he is a rational consumer, explain Phillip’s consumption combination of ice creams and slushies at the original price. Refer to your decision-making process and specific data from Table 3.

Question 2.d

If Phillip has the same budget of $10.00 to spend, use Table 3 to identify the quantities of ice creams and slushies that Phillip will buy after the price of ice creams falls to $2.00:

Question 2.e

On the axes below sketch the effect of the decrease in price of ice creams on Phillip’s demand for ice creams AND Phillip’s demand for slushies.

Question 2.f

Justify the effects of the decrease in price of ice creams on Phillip’s demand for ice creams.

In your answer you should refer to:

the Law of Demand
specific data from Graph 2

Question 2.g

Justify the effects of the decrease in price of ice creams on Phillip’s demand for slushies.

In your answer you should refer to:

the economic relationship between the two goods
specific data from Graph 3