QUESTION 1 (4 Marks) Table 1 below shows the production of pencils and pens Table 1 Combination | Pencils | Pens A | 0 | 16 B | 6 | 14 C | 8 | 11 D | 10 | 7 E | 12 | 0 The opportunity cost of increasing the production of pens from 7 to 14 units is ________ pencils. a) 2 b) 4 c) 6 d) 8 QUESTION 2 (4 Marks) Consider the supply and demand curves illustrated below. Which of the following statements is TRUE? a) At a price of P3, there is excess demand equal to the distance DE. b) At a price of P3, there is excess demand equal to the distance BE. c) At a price of P3, there is excess supply equal to the distance BE. d) At a price of P3, there is excess supply equal to the distance DE.
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