Subscribe to view full document.View Document
Running head: ASSIGNMENT 1 1
PARNEET KAUR MANN
BUSI1023 Introduction to Economics for Managers
ASSIGNMENT 1 2
Ans 1. Economics is the study of use of scarce resources in order to satisfy unlimited
human wants. Consumers always have limited budget to spend so in order to purchase things
they must adjust their budget and purchase within it. Supposing a person is having $10 budget
for a week and he must allocate his budget to spend either on hamburgers which costs $2 or on
train ticket which is $0.50. so, a person can either have all the hamburgers which he can get 5 per
week ($10/$2) or he can spend $10 whole on train tickets which he can get 20 per week
($10/$0.50). A rational consumer will also allocate his income between these two items like he
can purchase some 4 hamburgers and 4 train tickets, 6 hamburgers and 8 train tickets 2
hamburgers and 12 train tickets or can have 1 hamburger and 16 train tickets.
0 10 20 30 40 50 60 70 80
(thousands of pounds)
B. 10,000 pounds of apples.
ASSIGNMENT 1 3
C. It increases. For example, to move to E, The Fruit Farm must give up 10,000 pounds
of apples to produce an additional 8,000 pounds of pears. For each additional 10,000 pounds of
apples foregone, the payoff in terms of pears gets progressively smaller.
D. It increases. For example, to move to E, The Fruit Farm has to give up 10,000 pounds