Assignment 1 consists of two short answer questions (worth 5 marks each) based on Text material. Before attempting this assignment you are expected to have read Text chapters 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 for Question 1 and (b) the concepts of specialisation and exchange for Question 2 to 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) As a producer, why is it important to consider the price elasticity of demand of your product when setting the price you are going to charge? Question 2 (5 Marks) Explain the difference between comparative advantage an absolute advantage.
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