ECONOMIC

16. Some jobs pay more because they are less desirable. For instance, construction pays more
than retail sales because of these compensating differentials, which are nonmonetary
differences between jobs where higher or lower wages are paid because of differences in
the desirability of the job itself.
There Is 4 factors that the reasons for the difference in earnings between different groups
of workers, there are
 Male / Female → Male workers usually earn a higher salary compared to their female
counterparts.
 Unskilled / Skilled → Skilled workers earn more than unskilled workers
 Agricultural/manufacturing/service → Workers belonging to the services industry earn
more than the workers in manufacturing industry.
 Discrimination → Sometimes law of a particular country may give certain privileges
to a employees of a particular field (for example, independent commissions in
Maldives) who may earn a much higher salary even with a lower level of education
compared to many other professional jobs

17. Different things in PPC:

 Scarcity is the situation where limited resources are insufficient to produce goods and
services to satisfy unlimited human wants.
 The opportunity cost of a course of action is the benefit forgone by not choosing its
next best alternative
How to illustrate:

 Scarcity
An increase in the production capacity in the economy will lead to an outward shift in the
PPC resulting in a decrease in scarcity and vice versa. When the PPC shifts outwards, some
of the previously unattainable points will become attainable. The production capacity in
the economy could increase due to an increase in the quantity or the quality of factors of
production.
  Choice
A change in the tastes and preferences of society will lead to a movement along the PPC
which reflects a change in choice. The tastes and preferences of society may change due to
technological advancements
 Opportunity cost
The PPC is concave to the origin because the opportunity cost of producing each good
increases as its quantity increases. This is because resources are not equally suitable for the
production of different goods. As the economy produces more and more of a good, it has
to use resources that are less and less suitable for producing the good to actually produce
the good. Therefore, increasingly more units of other goods have to be given up to produce
each additional unit of the good
 Allocation resources
That is used to assign the available resources in economic ways. It means the scheduling
of activities and the resource required by those activities while taking consideration both
the resource availability and the project time.

18. Education:
The relationship between education and income is strong. Education is often referred to as
an investment in human capital. People invest in human capital for similar reasons people
invest in financial assets, including to make money. In general, those with more education
earn higher incomes (see the table). The higher income that results from a college degree
is sometimes referred to as the "college wage premium."
Skill:
Your skills, experience and the value you add to the buyer of your services or your
employer, determine the material compensation you get. This value may be very subjective
as some people are more skillful in convincing others that their contribution should be
valued higher than that of others.

19. A. Demand:
Demand is based on needs and wants a consumer may be able to differentiate between a
need and a want, but from an economist’s perspective they are the same thing.The total
number of units purchased at that price is called the quantity demanded. Economists call
this inverse relationship between price and quantity demanded the law of demand. The
law of demand assumes that all other variables that affect demand (to be explained in the
next module) are held constant.
Example:
Figure 1. A Demand Curve for Gasoline. The demand schedule shows that as price rises,
quantity demanded decreases, and vice versa. These points are then graphed, and the line
connecting them is the demand curve (D). The downward slope of the demand curve again
illustrates the law of demand—the inverse relationship between prices and quantity
demanded.
Supply:
When economists talk about supply, they mean the amount of some good or service a
producer is willing to supply at each price. A rise in price almost always leads to an increase
in the quantity supplied of that good or service, while a fall in price will decrease the
quantity supplied. Economists call this positive relationship between price and quantity
supplied that a higher price leads to a higher quantity supplied and a lower price leads to a
lower quantity supplied the law of supply. The law of supply assumes that all other
variables that affect supply (to be explained in the next module) are held constant.
Example:

Figure 2. A Supply Curve for Gasoline. The supply schedule is the table that shows
quantity supplied of gasoline at each price. As price rises, quantity supplied also increases,
and vice versa. The supply curve (S) is created by graphing the points from the supply
schedule and then connecting them. The upward slope of the supply curve illustrates the
law of supply—that a higher price leads to a higher quantity supplied, and vice versa.
20. Price elasticity of demand (PED) measures the change in the quantity demanded relative
to a change in price for a good or service.
Price elasticity of demand, also known simply as "price elasticity," is more specific to price
changes than the general term known as "elasticity of demand."
The formula for price elasticity is:
Price Elasticity = (% Change in Quantity) / (% Change in Price)

Price elasticity of supply (PES) measures the responsiveness of quantity supplied to a

change in price. It is necessary for a firm to know how quickly, and effectively, it can
respond to changing market conditions, especially to price changes. The following equation
can be used to calculate PES.