Wednesday 25 June 2014
Microeconomics
Discussion Point 4: In “Transmission R Us: Combining the PPF with the
Supply and Demand Curve (see PPF & S/D), a hypothetical situation
which led to a increase in transmission work at a repair shop is
llustrated. Explain (In a minimum of 50 words each), a. How the increase
in price from $200 to $300 is justifed (use in your discussion the
concept of Specialized resources, tangent lines, specialization) b. What
is the side-effect of not allowing the price to rise to $300? Provide
an original example (not one that a student has already mentioned) of
where you have experienced a negative consequence of the market not
working properly.
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