Economics UCC

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Economics UCC
2014-05-06 10:37:45
Economics UCC Firstyear
To help with the final year exam in UCC Ireland
Show Answers:

  1. Whats the difference between risk and uncertainty?
    Risk is weighing the potential costs to a particular idea or activity. Uncertainty is the inability to calculate risks or costs. The difference between them is a matter of knowledge
  2. What is the purpose of Day Resconstruction Methods and explain how this method collects information on what makes people happy?
    Day Reconstruction Methods measure how people spend their time and how they experience the various activities and settings of their lives.

    DRM is designed to collect data describing the experiences a person has on a given day, through a systematic reconstruction conducted on the following day

  3. Standard of living has has increased dramatically and happiness has not increased at all, Professor Daniel Kahenan
  4. From 2008 to 2009 the sale of a new, petrol engine Volkswagen Golf declined from 5,972 units to 2,268 units, despite the price staying constant at €21,105. Using the demand and supply framework, illustrate what happened in the market for new Volkswagen Golfs from 2008 to 2009.
  5. Explain why the long run average cost Curve of a firm is U-shaped
    As production increases, there are two basic influences at work. 1) Economies of scale. 2) Diminishing marginal returns. Economies of scale causes average cost to decrease as production increases. Think of Henry Ford's assembly line, producing many cars quickly instead of just a few cars slowly. Diminishing marginal returns causes average cost to increase as production increases. Imagine trying to build and run a second (or third, or tenth) factory...the ideal land for the factory isn't available any more (you've already built there!), your best low-cost suppliers are already running at full volume and now you're buying from slightly higher-cost suppliers, and it's harder to find labor with skills as good as you were able to hire in the first factory. Economies of scale outweighs diminishing marginal returns at low volumes, but eventually diminishing marginal returns outweight economies of scale at high volumes.