demand.The balance of payments accounts consist of a current account with visibles and invisibles section andtransactions in capital (external assets and liabilities including officia financing) (三)思考与实践Chapter questions and practices (1)The government of country C provides free medical treatment toall itscitizens.However. for more affluent citizens,a small charge is made if they need medication.The government has recently decided to increase thischarge by a moderate amount to reflect the increasing cost of the medicines. What effect is this likely to have on the demand for medicine within country C? >This is unlikely to significantly affect the demand for medicine.This is because medicine is likely to be highly inelastic.Given that the medicines are likely to be seen as a necessity for most individuals,citizens are likely to continue paying for their The price of the medicines is currently low and only applies to the wealthier citizens. This means that these payments will only represent a small proportion of their income again suggesting a low elasticity of demand. Also given the relatively low prices charged by the it tha citizens will be able to find cheaper substitutes.This would indicate that they will continue tobuy the medicines at the higher prices The increase will presumably be long in duration.This would normally mean that consumers have more time to find alternatives,leading to ncreased elasticity and a fall in demand.However,given the other factors already mentioned.on balance there is likely to be little change in the level ofdemand (2)The government of country F has decided to impose a minimum wage for all workers.which is above the current average market labour rate Which of the following isa potential consquence of this? A Rising employment within country F B Falling costs of manufacturing in country F C Lower selling prices,leading to higher demand DSurplusof labour created within country F >D (3)Suppose we increase the number of workers while keeping the numberof machines constant Initially the extra workers will allow specializationand increased efficiency.This will cause average costs to fall. As we keep adding staff.however.they will eventually start getting ineach other's way and having to wait to access machines.The systemtherefore becomes less efficient and the average production costs willbegin to rise. (4)As a business grows,the number of units it produces will increase.Thismeans that in the shor term,the average cost of factory rent per unit willfall,as the fixed costs will be spread over a 12 12 demand.The balance of payments accounts consist of a current account with visibles and invisibles sections andtransactions in capital (external assets and liabilities including official financing). （三）思考与实践 Chapter questions and practices (1) The government of country C provides free medical treatment to all its citizens. However, for more affluent citizens, a small charge is made if they need medication. The government has recently decided to increase this charge by a moderate amount to reflect the increasing cost of the medicines. What effect is this likely to have on the demand for medicine within country C? ➢ This is unlikely to significantly affect the demand for medicine. This is because medicine is likely to be highly inelastic. Given that the medicines are likely to be seen as a necessity for most individuals, citizens are likely to continue paying for their medication regardless of the cost. The price of the medicines is currently low and only applies to the wealthier citizens. This means that these payments will only represent a small proportion of their income, again suggesting a low elasticity of demand. Also, given the relatively low prices charged by the government, it is unlikely that citizens will be able to find cheaper substitutes. This would indicate that they will continue to buy the medicines at the higher prices. The increase will presumably be long in duration. This would normally mean that consumers have more time to find alternatives, leading to ncreased elasticity and a fall in demand. However, given the other factors already mentioned, on balance there is likely to be little change in the level of demand (2) The government of country F has decided to impose a minimum wage for all workers, which is above the current average market labour rate. Which of the following is a potential consequence of this? A Rising employment within country F B Falling costs of manufacturing in country F C Lower selling prices, leading to higher demand D Surplus of labour created within country F ➢ D (3) Suppose we increase the number of workers while keeping the numberof machines constant. Initially the extra workers will allow specializationand increased efficiency. This will cause average costs to fall. ➢ As we keep adding staff, however, they will eventually start getting ineach other's way and having to wait to access machines. The systemtherefore becomes less efficient and the average production costs willbegin to rise. (4) As a business grows, the number of units it produces will increase. Thismeans that in the short term, the average cost of factory rent per unit willfall, as the fixed costs will be spread over a