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question 1a use indifference curves to

Question 1:

(a) Use indifference curves to distinguish between income and substitution effects.

(b) Hence, using the above techniques explain why the demand curve slope downwards.

Question 2:

What are the main criteria for designing a tax system? To what extent do you think the national residential property tax meet these criteria?

Question 3:

(a) What are externalities? A dyeing unit of a textile firm discharges effluents in the lagoon, polluting the water, adversely affecting a nearby hotel resort, fishermen and the community at large. Illustrate graphically why this problem results in a departure from a perfectly competitive market.

(b) What conclusions can be drawn about market allocations?

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