Economics

Q5 … Increases because the total product curve is increasing and gets steeper as units of labour are added. Eventually the additional units of labour will obstruct with the productivity of all the other units of labour being employed. This will result in the average product of labour falling; the interruption to productivity will get worse because more units of labour are getting added. The total product is therefore still increasing but each successive addition is getting smaller.

Q10….An economy is in recession this is due to the lack of aggregate demand for goods and services. If there is an economic recession there is more likely to be an increasing level of unemployment due to plant closures and worker lay – offs because of a fall in demand which would lead to a contraction in output across various industries.

Q7…… suppose voters have short memories and are heavily influenced by how the economy is doing just before the election. To get re elected, the government manipulates the economy into a slump, then mops up this space capacity by using government policy to boost output and income as the election approaches, achieving a temporary period of impressive looking growth. The voters think that the government has got things under control and votes them in for another term of office.

Q6…….adverse selection can be a problem when there is asymmetric information, between the seller of insurance and the buyer in particular insurance will often not be profitable when buyers have better information about heir risk of claiming than does the seller.