Question

Q13: If a haircut at the barbers were to increase from $22 to 25, then the following would be true: (1)

1. More haircuts would be offered, perhaps in the form of additional styles or longer hours
2. Some customer might order fewer services at the barber’s
3. Some customer might switch barbers
4. A & C
5. All of the above . i choose And c d,

Q14: How is the business sector different from the foreign sector, and b) does the GDP account for both sectors or just one? (1)

Answer 1

Q 13) (e) All of the above

If a haircut at the barbers increases from $22 to $25, then due to the increase in price, the demand would decrease, the supply of haircut would increase and consumers would shift towards other substitute services. So, the decrease in demand is illustrated by option b - some customer might order fewer services at the barber's, the increase in supply is illustrated by option a - more haircuts would be offered, perhaps in the form of additional styles or longer hours, and the shift towards other substitute goods is illustrated by option c - some customer might switch barbers. Hence, the option e - all of the above is correct.

Q 14) The business sector consists of firms in a particular economy which delivers goods and services to the consumers. The firms consisting the business sector includes all the small-sized, medium-sized and large-sized firms in geographical boundary of a country. The foreign sector, on the other hand, consists of all the firms and other transactions outside the geographical boundary of a country. For example, the foreign sector includes firms and individuals of other countries doing business in the domestic country. The business sector receives income from the sale of goods and services, income from exports etc and the foreign sector receives income from the imports done by the business sector.

The GDP accounts for both the sectors. The circular flow model takes into account four sectors which comprises the GDP of an economy, namely, the household sector, government sector, business sector and the foreign sector.