QUESTION ONE: Production possibility frontier model and consumer equilibrium condition

• Discuss how the production possibility frontier model can be used to illustrate the basic economic problem of scarcity. 
• Explain the consumer equilibrium condition according to utility theory. Include in your answer the provision of its formula.

QUESTION TWO: Factors that would result in the shift of the supply curve and demand and supply analysis

• List and explain four (4) factors that would result in the shift of the supply curve from S1 to S2 in the diagram below.      

• Discuss the two main types of related goods according to demand and supply analysis. 

QUESTION THREE: Cases of price elasticity of demand and complement goods or substitute goods

• Discuss two (2) cases of price elasticity of demand. Use diagrams to motivate your answer.        
• Explain how, using elasticity as the basis for your answer, it can be determined whether two goods, A and good B are complement goods or substitute goods in consumption.              

QUESTION FOUR: Price control implemented by a government

• Discuss the type of price control that can be implemented by a government to protect vulnerable labour in a country from being exploited. Substantiate your answer with the aid of a diagram.

Answer to Question 1:

The production possibility Frontier is also known as production possibility curve and it has a significant role to play in economics. The main explanation provided by the production possibility curve is the estimated quantities that can be produced of two products if both depends upon the same finite resources. This concept of production possibility curve can be utilised in order to explain the basic economic problem of scarcity by way of ……..

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