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Question
1
Dean
loves
to
play
PS4
games
and
spends
a
lot
of
his
time
and
money
on
buying
and
playing
games.
He
also
is
dedicated
to
playing
water
polo
and
has
practice
three
times
a
week.
At
the
moment
he
works
for
four
hours
a
week
at
a
local
fish
and
chip
shop
but
finds
that
this
does
not
give
him
enough
income
to
buy
all
the
PS4
games
he
would
like.
He
would
like
to
work
more
but
this
would
interfere
with
his
water
polo
practice
and
games.
Explain
what
the
Economic
problem
that
Dean
faces
is.
You
should
define
and
use
the
following
terms
in
your
answer:
scarcity
and
opportunity
cost.
Check
answer.
Economic
problem
is
Scarcity,
Dean
has
unlimited
wants
but
limited
means.
Time
and
income
are
limited,
there
are
only
24
hours
a
day,
and
Dean
wants
to
play
PS4
games,
practice
for
water
polo
and
work.
Income
is
limited
because
Dean
wants
to
buy
PS4
games
but
does
not
have
enough
money
to
buy
all
the
games
he
wants.
Deans
has
to
make
a
choice
,
if
he
chooses
to
work
more
to
get
money
to
buy
more
games
then
he
will
have
an
opportunity
cost
of
practising
water
polo,
this
is
the
next
best
alternative
forgone.
Next
Question.
Question
2
Dean
has
decided
to
work
another
six
hours
a
week
at
the
fish
and
chip
shop,
but
his
parents
are
not
happy
with
this
decision.
Dean’s
parents
are
concerned
with
how
much
time
he
spends
playing
PS4
games
and
would
like
him
to
go
outside
and
exercise
more.
They
are
also
concerned
about
his
progress
at
school
and
feel
playing
PS4
games
are
interfering
with
his
education.
They
are
not
happy
that
he
is
going
to
work
more
and
want
him
to
spend
more
time
studying
and
exercising.
Fully
explain
how
values
might
influence
the
economic
decision
that
Dean
must
make
about
working
and
water
polo
games
and
practice.
In
your
answer,
you
should:
•
define
what
is
meant
by
values
•
Explain
what
the
Economic
decision
is
he
has
to
make.
•
describe
the
differing
values
held
by
Dean
and
his
parents
•
explain
how
those
differing
values
would
influence
Dean’s
decision
about
work,
water
polo
training
and
playing
PS3
games
and
cause
a
conflict
with
his
parents
•
explain
how
Dean
could
resolve
the
conflict
by
making
a
compromise
economic
decision.
Check
answer.
Values
are:
•
core
beliefs
•
key
principles
•
what
individuals
consider
important.
Values
of
Dean:
•
importance
of
games
/
PS3
Values
of
parents:
•
value
of
education
•
importance
of
exercise
/
living
healthy
life
style.
Influence
of
values
on
economic
decisions:
Different
values
influence
decisions
in
different
ways.
As
Dean
values
free
time
/
money
/
playing
PS4
games,
he
wants
to
earn
more
income
so
that
he
can
do
the
things
he
likes
to
do
such
as
play
PS4
games.
As
his
parents
value
education
and
exercise
they
will
want
him
to
work
less
/
study
more
and
spend
more
time
doing
sports.
Likely
conflict:
Parents
are
unhappy
with
Deans
decision
to
work
more.
Resolution
ideas:
•
Dean
could
only
work
another
3
hours.
•
Dean
could
cut
down
on
PS3
game
playing
time.
The
compromise
would
mean
that
Dean
can
do
what
he
feels
is
important
but
at
the
same
time
he
would
keep
his
parents
happy
because
he
would
be
spending
more
time
studying
/
exercising.
Next
Question.
Previous
Question.
Law
of
Demand:
As
the
price
(of
PS4
games)
falls,
the
quantity
demanded
rises.
Ceteris
Paribus.
Reasons
for
the
existence
of
the
law:
Consumers
respond
to
price
falls
by
buying
more
because
their
means
are
limited
/
need
or
desire
more.
Explanation
of
Dean’s
response:
As
the
price
drops
from
$120
to
$80,
ceteris
paribus,
Dean
can
afford
and
is
willing
to
buy
more,
so
the
quantity
demanded
increases
from
2
to
4
games
and
PS4
games
are
now
relatively
cheaper
than
other
types
of
games.
Question
3
Fully
explain
what
Dean’s
response
will
be
if
the
price
of
PS4
games
decreases
from
$120
to
$80
and
the
number
of
games
he
buys
increases
from
2
to
4
games.
Check
answer.
Next
Question.
Previous
Question.
Relationship:
PS4
games
and
accessories
are
complements
–
that
are
used
together
or
in
conjunction
with
each
other.
Effect
on
demand
for
PS4
games:
As
the
price
of
PS4
accessories
increases
this
causes
a
decrease
in
the
quantity
demanded
for
the
accessories
this
leads
to
a
decrease
in
Dean’s
demand
for
PS4
games
because
the
accessories
and
the
games
are
used
in
conjunction
with
each
other.
Possible
flow-on
effects:
As
PS4
accessories
are
more
expensive
and
Dean’s
demand
for
the
games
fall
•
Dean
might
switch
to
another
type
of
gaming
system
–
Nintendo
etc
because
now
relatively
cheaper
to
operate.
•
Dean
would
have
more
free
time
to
do
other
things
because
he
is
playing
less
games.
•
Has
more
income
to
spend
on
other
things
such
as
his
sports
etc
Question
4
Dean
also
spends
some
of
his
income
on
other
PS4
items
such
as
controllers
and
the
new
motion
controller.
Check
answer.
Next
Question.
Previous
Question.
Question
5
Dean’s
family
is
typical
of
many
households.
Most
of
their
disposable
household
income
is
spent
on
necessities
like
food,
rent,
power,
insurance,
and
health.
Often
with
grocery
shopping
Dean’s
family
has
to
buy
the
cheaper
options
such
as
budget
brands.
There
is
little
left
over
for
luxuries
like
new
clothes,
entertainment,
or
holidays.
Explain
why
most
of
Dean’s
family’s
income
is
spent
on
necessities.
In
your
answer,
you
should:
•
describe
the
differences
between
luxury,
necessity,
and
inferior
goods
using
relevant
examples.
•
explain
why
Dean’s
family
does
not
buy
many
luxury
items.
Check
answer.
Description
of
types
of
goods:
Luxury
goods
are
goods
that
are
not
necessary.
The
demand
for
luxury
goods
such
as
PS3
games
increases
if
income
increases.
Necessity
goods
are
essentials.
The
demand
for
necessity
goods,
such
as
bread,
increases
if
income
increases.
However,
because
there
is
only
so
much
that
a
person
can
consume,
when
income
increases
the
increase
in
demand
for
necessities
is
proportionally
less
than
the
increase
in
income.
Inferior
goods
are
cheap,
lower
appeal
goods
such
as
free
internet
games.
The
demand
for
inferior
goods
falls
as
income
increases.
Free
internet
games
are
an
inferior
good
compared
to
PS3
games.
Explanation
of
why
not
many
luxury
goods
are
not
brought
The
demand
for
luxury
goods
increases
as
income
increases.
Luxury
goods
are
brought
if
there
is
a
surplus
or
leftover
cash
after
all
essentials
have
been
bought.
Luxury
goods
are
nice
to
have
but
not
necessary;
so
because
the
budget
would
not
allow
for
it,
Dean’s
family
does
not
buy
many
luxury
goods.
Next
Question.
Previous
Question.
Question
6
Dean’s
father
has
just
changed
jobs
and
has
had
a
large
increase
in
income.
Fully
explain
how
Dean’s
family
spending
patterns
might
change.
In
your
answer,
you
should:
•
describe
the
type
of
goods
Dean’s
family
will
most
likely
buy
more
of
•
describe
the
type
of
goods
Dean’s
family
will
most
likely
buy
less
of
•
explain
the
reason
for
each
of
the
above
changes
in
demand
•
explain
ONE
flow-on
effect
of
these
changes
in
demand
on
the
spending
habits
of
Dean’s
family.
Check
answer.
Explanation:
With
an
increase
in
income
Dean’s
family
can
now
afford
to
buy
more
luxury
items.
Dean’s
family
will
also
buy
less
inferior
goods
as
they
can
now
afford
to
buy
better
quality
items
and
so
spending
on
budget
brands
will
decrease.
Spending
on
necessities
on
necessities
will
stay
about
the
same.
Although
they
may
spend
a
little
more
by
buying
better
quality
items,
overall
spending
will
not
change
much.
e.g.
One
flow
on
effect
could
be
with
buying
less
inferior
goods
and
more
better
quality
items,
Dean’s
family
may
now
be
eating
healthier
and
so
their
health
may
improve,
leading
to
less
doctor’s
visits
and
less
spending
on
medicine
etc.
Previous
Question.