QUESTION 1

1. Read the article below. Based on the information provided in the article, determine the price elasticity of demand for gasoline and clothing and accessory. Explain your answer.

(3 marks)

Extracted from: https://canada.constructconnect.com/dcn/news/economic/2020/08/pandemic-shines-spotlight-on-price-elasticity

1. Describe why there are incentive and coordination problems in central planning. Do we face such problems in a capitalist system? Explain.

(8 marks)

1. Do incentive and coordination problems exist in an Islamic economy?

(4 marks)

1. "The relative scarcity of resources makes the operation of any economy a matter of choosing between alternatives". Explain

(6 marks)

1. A clothing accessory company produces scarves and earrings. Below are the production possibility combinations it can produce with the resources it has.

Scarves ('000 units)	Earrings ('000 units)
10	0
9	50
8	90
7	120
6	145
5	165
4	185
3	200
2	215
1	225
0	230

1. Using the data in the table, graph the production possibility curve (with earrings on the vertical axis).

(2 marks)

1. Do the principles of "increasing opportunity cost" hold in this nation? Explain using information provided in the table above.

(2 marks)