There Is No Such Thing As A Free Lunch Essay

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Question 1. A. Using the concept of opportunity cost, explain the statement “There is no such thing as a free lunch”.
Answer. The statement “There is no such thing as a free lunch” indicates that it is impossible for a man to get something for nothing. The opportunity that is foregone is known as opportunity cost. That is, the price that we pay for doing whatever it is we did was the opportunity you can no longer enjoy. In other words, opportunity cost is defined as the cost of the best option forgone as a result of choosing an alternative
The phrase appears to have come about in response to the libertarian views of Henry Wallace, the US Vice President between 1941 and 1945. He wrote an article which was originally published by The Atlantic …show more content…

Using the mid-point method, calculate the price elasticity demand for lamb and interpret the value obtained.

= 0.5/0.5
= 1
Therefore, the price elasticity demand for lamb is 1
Question 4.
The table below shows the demand and supply for iPods at varying price per iPod:

(a). In the graph provided, plot the supply and demand curves for ipods, and determine the equilibrium price and quantity.

(b). What effects will a decrease in the price of microchip (input) on the equilibrium price and quantity of ipods? What assumptions have you made to provide your answers?
Answer. A decrease in the price of microchip will eventually increase the demand to a greater extent and this will lead to stock out as all the stocks in hand will be supplied and we will end up in having very minimal number of units to supply
©.What effects will an increase in the price of a substitute on the equilibrium price and quantity of ipods? What assumptions have you made to provide your

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