Assignment 1 consists oftwo short answerquestions (worth5 marks each)based on Text material. Before attempting this assignment you are expected to have read Textchapters 1, 2, 3 and 4. Sources used in your answer should be fully referenced in APA 6th style.
Answer the following questions ensuring that you apply economic principles or theory related to (a) the concepts of supply and demand forQuestion 1 and (b)the conceptsof specialisation and exchange for Question 2to inform your analysis and support your decisions.Communicate your ideas with correct grammar, spelling and writing style and support your answers with diagrams as necessary.
Question 1 (5 marks)
Explain the concept of the price elasticity of demand and provide examples where understanding the nature of the price elasticity of demand has been important in the decision making of a firm.
Question 2 (5 Marks)
Explain the concepts of comparative advantage and absolute advantage and provide examples of situations in which countries have ignored the principle of comparative advantage to their cost.
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