ECS2601 Assignment_1_Solu tion

ECS2601
Assignment_1_Solu
tion

, Assignment 1 Semester 2 Solution Guidelines


1. An improvement in technology tends to reduce the supply (shift it to the left).


1. True
2. False


The correct option is 2.


Technology tends to increase the supply (shift the curve to the right) by increasing productivity,
in other words it increases output per unit of input.


2. The market supply curve is the vertical summation of all the individual supply curves.


1. True
2. False


The correct option is 2.


The market supply is the horizontal summation of the individual supply curves, for each price;
it represents the sum of all the individual quantities supplied.


3. A normal good is one for which the income elasticity is greater than one.


1. True
2. False


The correct option is 2.


A normal good has an income elasticity greater than zero.


4. When output equals zero, total cost = fixed cost.


1. True
2. False




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