ECS1501/101/3/2020

Tutorial Letter 101/3/2020

Economics 1A

ECS 1501

Semesters 1 and 2

Department of Economics

This tutorial letter contains important information

about your module.

BARCODE
 CONTENTS

Page
1 INTRODUCTION .............................................................................................................................. 3
2 PURPOSE AND OUTCOMES ......................................................................................................... 3
2.1 Purpose ..... ........................................................................................................................................... 3
2.2 Outcomes ........................................................................................................................................... 3
3 LECTURER CONTACT DETAILS ................................................................................................ 3
3.1 Lecturer ........................................................................................................................................... 3
3.2 University ........................................................................................................................................... 3
4 RESOURCES ..................................................................................................................................... 4
4.1 Study guides and tutorial letters ........................................................................................................... 4
4.2 myUnisa ... ........................................................................................................................................... 4
4.3 E-tutors ..... ........................................................................................................................................... 5
4.4 Face-to-face tutors ................................................................................................................................ 5
5 STUDY PLAN .................................................................................................................................... 5
5.1 First semester........................................................................................................................................ 6
5.2 Second semester ................................................................................................................................... 7
6 ASSESSMENT ................................................................................................................................... 7
6.1 Assignments ......................................................................................................................................... 7
6.1.1 Due dates for assignments .................................................................................................................... 8
6.1.2 Submitting assignments........................................................................................................................ 8
6.1.3 Assignment marks ................................................................................................................................ 9
6.2 Examinations ...................................................................................................................................... 10
6.2.1 Examination admission ...................................................................................................................... 10
6.2.2 Examination paper format .................................................................................................................. 10
6.2.3 Examination script reviews or re-marks............................................................................................. 10
6.2.4 Marks ........ ......................................................................................................................................... 10
7 CONCLUSION ................................................................................................................................. 11
8 ASSIGNMENTS ............................................................................................................................... 12
8.1 FIRST SEMESTER ASSIGNMENTS............................................................................................... 12
8.2 SECOND SEMESTER ASSIGNMENTS ......................................................................................... 30

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1 INTRODUCTION
Welcome to Economics 1A, an introduction to Microeconomics. We hope that you will find this module
interesting and rewarding. We will do our best to make your study of this module successful. You will be
well on your way to success if you start studying early in the semester and keep on working throughout
the semester.

2 PURPOSE AND OUTCOMES

2.1 Purpose
When you are credited with this module, you will have a basic knowledge of microeconomic theory and
you will be able to apply, analyse and interpret microeconomic concepts and principles. The purpose of
this module is to gain insight into the solving of economic problems in different economic systems and to
understand how households and firms take decisions and prices are determined.

2.2 Outcomes
The main outcomes of this module are the following:
You must be able to

• conceptualise and apply the main economic problem in different economic systems and use a
diagram to explain how the economy functions
• explain and conceptualise the interaction between consumers and producers in a perfectly
competitive goods market
• conceptualise, apply, calculate and evaluate the price decisions of firms under perfect market
conditions in both the short and the long run
• conceptualise the factors that influence the labour market
More detailed module outcomes and assessment criteria can be found in each topic.

3 LECTURER CONTACT DETAILS

3.1 Lecturer
Direct all academic enquiries about the content of this module (i.e. not administrative queries) to the
following e-mail addresses:
[email protected]
3.2 University
If you need to contact the University about matters not related to the content of this module, consult the
brochure my Studies @ Unisa, which you have received with your study material. This brochure contains
information on how to contact the University (e.g. who to write to for different queries, important
telephone numbers, addresses, and details of the times certain facilities are open). Below you will find
some important e-mail addresses for the departments that you might need to contact.

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You can also send you enquiry directly to the following addresses:
• [email protected], for assignments queries
• [email protected], for study material queries
• [email protected], for queries on the examination
• [email protected], for account queries
• [email protected], for application and registration queries
• [email protected], for assistance with myLife e-mail accounts
• [email protected], for assistance with myUnisa

4 RESOURCES
4.1 Study guides and tutorial letters
The fifteen topics covered in this module are included in Study Guide 1 and Study Guide 2.
• Study Guide 1 contains topics 1 to 8.
• Topics 9 to 15 are included in Study Guide 2.
The study guides covers all the academic content of the module. Please note there is no prescribed
textbook for this module – everything you need to prepare for the examination is covered in the study
guides.
It is imperative for your own success to read all the tutorial letters immediately.
• This tutorial letter (Tutorial letter 101) contains administrative information about this module
as well as the assignments that you need to complete during the semester (see Section 8).
• Tutorial Letter 102 is a glossary that contains definitions of important economics terms and
concepts in English, Afrikaans, isiZulu, isiXhosa, Northern Sotho, Sesotho and Setswana.
• Tutorial Letter 103 gives you more information on the examination.
• Solutions to the questions in the assignments are included in Tutorial Letters 201 to 204
(tutorial letters 201 to 203 will only be available after the closing date of the specific
assignment).

4.2 myUnisa
With internet access, you can get resources and information on the Unisa online campus, myUnisa. Start
on the main Unisa website at http://www.unisa.ac.za and then click on the orange myUnisa block. This
will take you to the myUnisa website. To go to the myUnisa website directly, go to https://my.unisa.ac.za.
When you are on the myUnisa website, click on the Claim UNISA Login on the left-hand side of the
screen. You will then be prompted to give your student number to claim your initial myUnisa details and
to get your myLife login details.
You will see ECS1501-20-S1 (S2 in second semester) in the row of modules on the
top of the webpage. If you cannot find the module you require, click on More Sites.
Click on the module you want to open.

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We will communicate with you on the main module site. On this site, you will be notified of important
arrangements by means of the Announcements tool. If you have a question or want to interact with your
fellow students, you are welcome to use the Discussion Forum tool.
You will find copies of all the tutorial letters and examination papers of previous years under Official
Study Material.

4.3 E-tutors
Except for the main webpage, you will also be allocated to an e-tutor webpage. You will find your e-tutor
webpage on myUnisa. It will be named ECS1501-20-S1-xxE, where the xx refers to your e-tutor group
number. E-tutors have been appointed to assist you with any academic problem that you may encounter.
You can expect the following from your lecturer and e-tutor:
• a weekly e-mail sent from your lecturer to your myLife address, informing you about your study
instructions for that week (You can also find these under Announcements on the main module
webpage.)
• Power Point slides on each topic that will become available under Additional Resources on the
main module site (These have been developed to take you through each topic and provide
additional explanations where necessary.)
• together with the above-mentioned slides, a quiz on each topic, which will be made available on
the main module site You are encouraged to discuss these questions with your fellow students on
the Discussion Forum on your e-tutor site. Your e-tutor will also provide feedback under the
Discussion Forum, but only if you initiate the discussion, for example, by providing your
suggested answer.
• academic support (If you have any questions about the contents of the module, discuss them with
your e-tutor and fellow students on the Discussion Forum of your e-tutor site.)
The Discussion Forum on the main ECS1501 webpage will only be monitored until you are allocated to
an e-tutor group.

4.4 Face-to-face tutors

Lecturers will not present any discussion classes for this module but there will be face-to-face (F2F) tutor
classes at the various Unisa regional learning centres. If you are interested in the tutor classes you should
contact the learning centre closest to you to enrol.
Please be aware of the existence of multiple fraudulent and predatory providers of classes and
examination guidance to Unisa students. Please note that Unisa do not have agreements with any of these
agencies/schools/colleges to provide tuition or support to our students. Unisa also do not provide these
predators with study material, guidelines or your contact information. These providers may not have the
necessary expertise to assist you and often charge exorbitant fees.

5 STUDY PLAN
The best way to be successful in this module is to work diligently from the start to the end of the
semester. The following study programme was drawn up to help you work through the module
systematically. The lecturers will also work according to this study programme.

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5.1 First semester

WEEK WEEK ACTIVITY

COMMENCING
1 10 February Work through topic 1 – The study field of economics.

2 17 February Work through topic 2 – The economist’s toolkit – and topic

3 – Economic systems.

3 24 February Work through topic 4 – Production possibilities curve – and

topic 5 – Circular flow model.

2 March Closing date for Assignment 01.

4 2 March Work through sections 6.1 and 6.2 of topic 6 – Demand,

supply and prices.

5 9 March Work through section 6.3 of topic 6 – Demand, supply and

prices – and topic 7 – Consumer and producer surplus.

6 16 March Work through topic 8 – Changes in demand and supply.

23 March Closing date for Assignment 02.

7 23 March Work through topic 9 – Government intervention.

8 30 March Work through topic 10 – Price elasticity – and topic 11 –

Other elasticities.

9 6 April Work through topic 12 – Theory of demand.

14 April Closing date for Assignment 03.

10 14 April Work through topic 13 – Theory of supply.

11 20 April Work through topic 14 – Perfect and imperfect competition.

12 27 April Work through topic 15 – Labour market.

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5.2 Second semester

WEEK WEEK ACTIVITY

COMMENCING
1 3 August Work through topic 1 – The study field of economics.

2 10 August Work through topic 2 – The economist’s toolkit – and topic

3 – Economic systems.

3 17 August Work through topics 4 – Production possibilities curve – and

topic 5 – Circular flow model.

24 August Closing date for Assignment 01.

4 24 August Work through sections 6.1 and 6.2 of topic 6 – Demand,

supply and prices.

5 31 August Work through section 6.3 of topic 6 – Demand, supply and

prices – and topic 7 – Consumer and producer surplus.

6 7 September Work through topic 8 – Changes in demand and supply –

and topic 9 – Government intervention.

14 September Closing date for Assignment 02.

7 14 September Work through topic 10 – Price elasticity – and topic 11 –

Other elasticities.

8 21 September Work through topic 12 – Theory of demand.

9 28 September Work through topic 13 – Theory of supply.

5 October Closing date for Assignment 03.

10 5 October Work through topic 14 – Perfect and imperfect competition.

11 12 October Work through topic 15 – Labour market.

6 ASSESSMENT

6.1 Assignments
There are four assignments per semester, which are included in this tutorial letter. For examination
admission, you need to submit Assignments 01. However, to maximise your chances of obtaining a good
semester mark, to gain more insight into the module, and to achieve the intended learning outcomes, it is
strongly recommended that you submit Assignments 01, 02 and 03.

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Note. Please do not submit Assignment 4. Assignment 04 does not count towards your semester mark and
will not be marked. We have included Assignment 04 to give you the opportunity to assess your
understanding of the last three topics (13 to 15) of Study Guide 2. The solutions and explanations to
Assignment 04 will be made available towards the end of the semester.

6.1.1 Due dates for assignments

Since due dates are communicated well in advance in this tutorial letter, no late assignments will be
considered. Enquiries about the receipt of assignments and marks should be directed to the Directorate of
Student Assessment Administration and not to the lecturers. Refer to the my Studies @ Unisa brochure
for more information.

Semester 1 – assignment due dates

Assignment Unique number Due date Topics covered in assignment

01 530090 2 March Topics 1 to 5 (see Study Guide 1)

02 702200 23 March Topics 6 to 8 (see Study Guide 1)

03 706557 14 April Topics 9 to 12 (see Study Guide 2)

Semester 2 – assignment due dates

Assignment Unique number Due date Topics covered in assignment

01 719305 24 August Topics 1 to 5 (see Study Guide 1)

02 817792 14 September Topics 6 to 8 (see Study Guide 1)

03 733269 5 October Topics 9 to 12 (see Study Guide 2)

6.1.2 Submitting assignments

In addition to the general assignment number (eg 01 or 02), each assignment have its own unique
assignment number (eg 102717). Please ensure that you use the correct unique number for the assignment
you want to submit.
You may submit your assignments either electronically on myUnisa, the Unisa assignment boxes or by
post. For detailed information and requirements on assignments, see the brochure my Studies @ Unisa,
which you received with your study material.

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Online submission myUnisa

Follow these steps to submit an assignment via myUnisa:
• Log in using your student number and password on myUnisa.
• Select your module.
• Click on Assessment Info in the menu on the left-hand side of the screen.
• Click on the assignment number you wish to submit.
• Follow the instructions on the screen.
If the status changes to RESUBMIT, it means that the assignment was received successfully. However,
you are given the option to resubmit your assignment if you like. Just note that resubmitting will
overwrite all previous submissions and it will be taken as the final submission. Therefore, if you resubmit
after the due date, your assignment will be considered late and will not be marked.
If you experience any problems when submitting your assignment electronically (cancellation,
resubmission, etc.), e-mail the myUnisa helpdesk at [email protected].

Assignment boxes
If you submit your assignment by post or the Unisa assignment boxes you should keep a copy of your
completed mark-reading sheet, especially assignment 01 which is compulsory for examination admission.
In the event that the assignment is lost before it can be assessed, you will have the necessary proof.
Note that the date of receipt appearing on the system (myUnisa) may differ from the date at which you
deposited your assignment at a Unisa assignment box (e.g. Pretoria, Johannesburg, Nelspruit, etc). The
date on myUnisa is the date at which your assignment reached Unisa. The assignment boxes are emptied
regularly and the date at which it is received in the box will be stamped on the assignment envelope.
This means that, if your assignment is submitted at any Unisa box on or before the due date, it will still be
marked and contribute to your semester mark – even if the actual capturing date on the system is after the
due date.
If you make use of the postal service, your assignments should be addressed to:
The Registrar
PO Box 392
UNISA
0003
It is not possible for the University or any lecturer to receive and process assignments that are transmitted
by means of facsimile or e-mail. No assignments submitted by facsimile or e-mail will be marked.

6.1.3 Assignment marks

One mark is awarded for each correct answer. No marks is deducted for incorrect answers. Assignment
01 will contribute 20% to your semester mark. Assignments 02 and 03 will each contribute 40% to the
semester mark. To calculate you semester mark use the following formula:
𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚 = (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.1 × 0.2) + (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.2 × 0.4) + (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.3 × 0.4).

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6.2 Examinations
This module is offered over a semester period of approximately 15 weeks. This means that if you are
registered for the first semester, you will write the examination in May/June 2020 and the supplementary
examination in October/November 2020. If you are registered for the second semester, you will write the
examination in October/November 2020 and the supplementary examination in May/June 2021.

6.2.1 Examination admission

For admission to the examination, you must submit Assignment 01.

6.2.2 Examination paper format

The format of the exam paper is discussed in detail in Tutorial Letter 103. The main features of the exam
paper are:

(i) It will be a two-hour examination paper counting 100 marks.

(ii) The use of a non-programmable calculator is permissible.
(iii) The paper will consist of two sections: Section A and Section B.
• Section A is a written part and focuses on explanations of economic concepts and the drawing
and interpretation of diagrams.
• Section B consists of multiple-choice questions.

All the topics in the study guides are prescribed for the examination. For more information on the format
and content of the examination and copies of past examination papers, consult Tutorial Letter 103 (see the
Official Study Material link on myUnisa).

6.2.3 Examination script reviews or re-marks

The applications for and the administration of re-marks of examination scripts are handled solely by the
Examinations Section and not by the academic departments. If you would like your examination script to
be reviewed, send an e-mail to [email protected] or if you would like to apply for a re-mark, send an e-
mail to [email protected].

6.2.4 Marks
Your final mark is based not only on your examination mark but also on your semester mark. If your final
mark (as calculated by the method below) is 50% or more, you will pass ECS1501. If your final mark is
less than 50%, but more than 40%, you will not pass ECS1501, but will qualify for a supplementary
examination.
Use the following formula to calculate your final mark (if your examination mark is more than 40%):
𝑀𝑀𝑀𝑀𝑀𝑀𝑘𝑘𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓% = (𝑀𝑀𝑀𝑀𝑀𝑀𝑘𝑘𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠% × 0.2) + (𝑀𝑀𝑀𝑀𝑀𝑀𝑘𝑘𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒% × 0.8)
In line with the Unisa assessment policy, your semester mark will not be considered if you have received
less than 40% in the examinations. In such an event, the mark you obtained in your examination will be
your final mark. In other words, if your semester mark was 50% but you received 30% for the
examination, your final mark will be 30%.
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7 CONCLUSION
Do not hesitate to contact us, your lecturers, if you are experiencing problems with the content of this
tutorial letter or with any aspect of the module.
We wish you a fascinating and satisfying journey through the learning material and trust that you will
complete the module successfully.
Please work hard and enjoy this module.

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8 ASSIGNMENTS

8.1 FIRST SEMESTER ASSIGNMENTS

ASSIGNMENT 01
UNIQUE NUMBER 530090
Due date: 2 March 2020
Content: Topics 1 to 5
Weight: 20% of your semester mark
Submit: Via myUnisa or on a mark-reading sheet

1.1 Economics is

[1] the study of the markets for stocks and bonds.

[2] the study of choice under conditions of scarcity.
[3] exclusively the study of business firms.
[4] fundamentally the same as sociology.

1.2 In every economic system, choices must be made because resources are ________ and wants are
________ .

[1] unlimited; limited

[2] limited; unlimited
[3] unlimited; unlimited
[4] limited; limited

1.3 When a farmer in Limpopo Province decides to harvest lettuce by the use of machines instead of by
migrant workers, the farmer is answering the question.

[1] "How?"
[2] "For whom?"
[3] "What?"

1.4 Economists classify resources into the following categories

[1] available, scarce, expensive and natural.

[2] land, labour, capital and entrepreneurship.
[3] artificial, financial, human and manufactured.
[4] natural, imported, limitless and personal.

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1.5 The professional soccer players' union negotiates a contract that dramatically increases all players'
salaries. How would this influence the opportunity cost for a player who was considering giving up
soccer to pursue a career in broadcasting?

[1] It would not affect the opportunity cost of playing soccer or of broadcasting.
[2] It would increase the opportunity cost of continuing to play professional soccer.
[3] It should have no bearing on the player's decision from an economic standpoint.
[4] It would increase the opportunity cost of becoming a broadcaster.

1.6 The study of the choices made by individuals is part of the definition of

[1] macroeconomics.
[2] positive economics.
[3] normative economics.
[4] microeconomics.

1.7 Positive economics

[1] deals with economic laws established without doubt.

[2] describes what is rather than what ought to be.
[3] is practised by a school of economists known as positivists.
[4] describes what ought to be rather than what is.

1.8 "Ceteris paribus" means

[1] making all the necessary changes.

[2] other things being constant.
[3] for certain parameters.
[4] let the buyer beware.

1.9 An economy in which resources are allocated through the decentralised decisions of many firms and
households is called a ________ economy.

[1] command
[2] chaotic
[3] centrally planned
[4] market

1.10 The term "market" refers to

[1] physical structures only.

[2] locations where buyers and sellers meet physically.
[3] any arrangement that enables buyers and sellers to get information and trade with one another.
[4] trading arrangements that have been approved by the government.

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1.11 A country’s production possibility curve would shift outwards if

[1] more resources became available.

[2] unemployment was reduced.
[3] aggregate demand for goods and services increased.
[4] labour productivity fell.

1.12 Two reasons why an economy might operate inside of its production possibilities curve are

[1] productive efficiency and technological change.

[2] depressions and inflation.
[3] unemployment and productive inefficiency.
[4] opportunity costs and the substitutability of resources used in production.

Use the following production possibilities curve (PPC) of Waterberg to answer questions 1.13 to 1.15.
Waterberg can only produce windmills or tractors.

1.13 Point ____ shows an efficient use of resources, while Point ____ is unattainable.

[1] A; B
[2] B; C
[3] C; D
[4] D; E

1.14 Waterberg is currently producing eight tractors but decides to increase the production of tractors to
12. What is the opportunity cost of the decision?

[1] 3 000 windmills

[2] 4 000 windmills
[3] 6 000 windmills
[4] 10 000 windmills

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1.15 What will most likely happen when there is an influx of workers into Waterberg?

[1] Point E will become unattainable.

[2] Point B will become attainable.
[3] Waterberg will no longer be able to produce 12 tractors.
[4] Waterberg will no longer be able to produce 10 000 windmills.

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 ASSIGNMENT 02
UNIQUE NUMBER 702200
Due date: 23 March 2020
Content: Topics 6 to 8
Weight: 40% of your semester mark
Submit: Via myUnisa or on a mark-reading sheet

2.1 According to the law of demand,

[1] there is a positive relationship between price and quantity demanded.

[2] as the price rises, demand will shift to the left.
[3] there is a negative relationship between price and quantity demanded.
[4] as the price rises, consumers switch their purchases to substitute goods.

2.2 The demand curve for Beefy dog food shows the quantity of dog food demanded

[1] at each possible price of Beefy dog food.

[2] by South African consumers.
[3] at the equilibrium price for Beefy dog food.
[4] at each level of income.

2.3 Which of the following is the best example of a pair of complement goods?

[1] bicycles and bus tickets

[2] shoes and socks
[3] pens and pencils
[4] pizzas and hamburgers

Question 2.4 is based on the following diagram.

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2.4 Suppose that the market for Bolly Bubblegum is initially at Point A. If there is a decrease in the
price of bubblegum, the

[1] demand curve will shift to D1.

[2] market will move to Point B on demand curve D2.
[3] market will move to Point C on demand curve D2.
[4] demand curve will shift to D3.

2.5 If the Medical Research Council publishes a report that carbonated soft drinks have been linked to
cancer of the sweet tooth, it is most likely that the

[1] incomes of cancer specialists will rise in the future.

[2] supply curve of soft drinks will shift to the left.
[3] demand curve for soft drinks will shift to the right.
[4] demand curve for soft drinks will shift to the left.

2.6 The supply schedule for a particular good indicates the quantities

[1] actually sold with different productive capacities.

[2] supplied with different productive capacities.
[3] actually sold at various prices of the good.
[4] supplied at various prices of the good.

Question 2.7 is based on the following table.

Price of biltong sticks Benny’s supply Joon’s supply

0 0 0

R1 1 0

R2 1 1

R3 2 1

R4 4 2

R5 5 3

R6 6 4

R7 7 4

R8 10 5

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2.7 Assume that the market for biltong sticks has only two suppliers: Benny and Joon. According to this
table, if the price of biltong sticks is R6, the market will supply

[1] 4.
[2] 6.
[3] 10.
[4] 30.

Question 2.8 is based on the following table.

Price Quantity demanded Quantity supplied

R10,00 10 100

R8,00 20 80

R6,00 30 60

R4,00 40 40

R2,00 50 20

R0,00 60 0

2.8 If the price of this good is R2,00, there would be a _________ of _________ units.

[1] shortage; 30
[2] surplus; 30
[3] shortage; 50
[4] surplus; 20

2.9 At a price of R1 000 per laptop, the price is too low for equilibrium to occur in the market for
laptops. What this means is that

[1] consumer incomes are too low to buy the available supply of laptops.
[2] the price of laptops will fall because of unsold laptops.
[3] manufacturers wish to sell more laptops than consumers wish to buy.
[4] consumers wish to buy more laptops than manufacturers wish to sell.

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2.10 Which of the following could cause both a shift in supply and a shift in demand?

[1] the number of households

[2] tastes and preferences
[3] income changes
[4] expectations of future prices

2.11 The economists at Inggs Consulting consider Marula Beer to be an inferior good. During a
recession, when the income in the economy is decreasing, economists at Inggs Consulting would
expect the demand curve for Marula Beer to _________, causing the equilibrium price to
_________ and the equilibrium quantity to _________.

[1] shift to the left; decrease; decrease

[2] shift to the right; increase; increase
[3] shift to the right; decrease; increase
[4] shift to the right; increase; decrease

Question 2.12 is based on the following diagram.

2.12 Suppose that initially the market is in equilibrium as defined by demand and supply curves D1 and
S1. Which price/quantity combination could result from a decrease in the wages paid to workers?

[1] R100 and 50 000

[2] R150 and 50 000
[3] R75 and 75 000
[4] R150 and 75 000

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2.13 Consumer surplus is the difference between

[1] market prices and prices resulting from government regulation.

[2] what consumers want and what they get.
[3] the prices that producers would have been willing to charge and what they actually charge.
[4] the prices that consumers would have been willing to pay and what they actually pay.

Questions 2.14 and 2.15 refer to the following information on opportunity cost of a pink elephant for each
of five potential pink elephant producers.

Potential Opportunity cost

producer of a pink
elephant (R/pink
elephant)

Charles R1 500

Nicholas R1 200

Duncan R1 000

Fanie R750

Cobus R500

2.14 If the price of a pink elephant is R1 300, the total producer surplus for these five people is:

[1] R200.
[2] R650.
[3] R1 550.
[4] R1 750.

2.15 If the price of a pink elephant is R1 100, Duncan's producer surplus will be

[1] R1 200.
[2] R1 100.
[3] R100.
[4] R0.

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ASSIGNMENT 03
UNIQUE NUMBER 706557
Due date: 14 April 2020
Content: Topics 9 to 12
Weight: 40% of your semester mark
Submit: Via myUnisa or on a mark-reading sheet

3.1 If a maximum price is set below the equilibrium price,

[1] there will be a shortage.

[2] sellers will find it difficult to find willing buyers.
[3] market equilibrium will occur despite government regulation.
[4] all buyers will be able to purchase their desired quantities.

3.2 When government imposes price ceilings and floors in markets

[1] shortages and surpluses are eliminated.

[2] both buyers and sellers are better off.
[3] price no longer serves as a rationing mechanism.
[4] efficiency in the market is increased.

3.3 Which of the following is an example of a price ceiling?

[1] rent control

[2] minimum wages
[3] government price supports for agricultural products
[4] excise duties on wine

Question 3.4 is based on the following diagram of the market for fish.

21
3.4 If the government adopts a price floor policy for fish at a floor of R53/kg,

[1] both price and quantity sold will rise.

[2] both price and quantity sold will fall.
[3] price will fall and quantity will rise.
[4] price and quantity will stay the same.

3.5 If the total revenue from the sales of a good rises by 10% when its price is increased by 10%, the
demand for the good must

[1] be perfectly price elastic.

[2] be perfectly price inelastic.
[3] be unitary elastic.
[4] have a price elasticity of -1.

3.6 If the price elasticity of demand for Omo washing powder is 3.0, a ________ drop in price leads to
a __________ rise in the quantity demanded.

[1] 12 per cent; 36 per cent

[2] 12 per cent; 4 per cent
[3] R1 000; 3000-unit
[4] R1 000; 333-unit

Question 3.7 is based on the following table.

Price Quantity demanded

R1 100

R2 80

R3 60

R4 40

R5 20

3.7 The table above shows the demand schedule for ice cream cones. What is the price elasticity of
demand when the price changes from R4 per ice cream cone to R5 per ice cream cone? (Use the
formula for arc elasticity.)

[1] 0,33
[2] 1,00
[3] 1,15
[4] 3,00

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3.8 The admissions policy of Makopani University of Technology is to admit any student who is
willing to pay the university's tuition fees. In an effort to increase their total revenue, the board of
the university decides to reduce tuition fees. Apparently they

[1] are ignoring the law of demand.

[2] believe that the demand for an education from Makopani University of Technology is
perfectly inelastic.
[3] believe that the demand for an education from Makopani University of Technology is
inelastic.
[4] believe that the demand for an education from Makopani University of Technology is elastic.

3.9 The income elasticity of demand for a good measures the responsiveness of __________ to a
change in ___________.

[1] quantity demanded; price of a related good

[2] quantity demanded; income
[3] demand; price of a good
[4] quantity demanded; price of a good

3.10 When the price of erasers increases from R1,50 to R2,50, the quantity demanded of pencils is
unchanged. The cross elasticity of demand between erasers and pencils is __________ because
erasers and pencils ___________.

[1] 1; are substitutes

[2] 0,5; are complements
[3] 0; are normal goods
[4] 0; are unrelated

3.11 Duncan receives the following marginal utilities from the first four car washes that he buys each
year: 20, 15, 10 and 5. If each car wash sells for R10, the marginal utility per Rand spent on the
third car wash is

[1] 1
[2] 5
[3] 4,5
[4] 45

23
Question 3.12 is based on the following table showing Xoli's total utility from consuming candy bars and
bubblegum.

Total candy bars Total utility from Total bubblegum Total utility from
consumed consuming candy consumed consuming
bars bubblegum

1 20 1 12

2 30 2 18

3 36 3 21

3.12 If Xoli's allowance is R12, the price of candy bars is R2 per unit and the price of bubblegum is R3
per unit, you would advise her to purchase

[1] 3 packs of bubblegum.

[2] 3 candy bars and 2 packs of bubblegum.
[3] 3 candy bars.
[4] 2 candy bars and 3 packs of bubblegum.

3.13 Shadrack gets 5 units of total utility from 1 slice of pizza and 9 units total utility from 2 slices of
pizza. The principle of diminishing marginal utility allows us to conclude that the total utility from
3 slices of pizza will be ___________ units of utility.

[1] more than 12

[2] less than 13
[3] less than 9
[4] exactly 14

3.14 If diminishing marginal utility holds, and a person consumes less of a good,

[1] the price of the good will rise

[2] total utility will rise
[3] marginal utility will rise
[4] expenditure on the good will increase

3.15 If MUx/Px exceeds MUy/Py, the consumer should

[1] consume more of good X and less of good Y

[2] consume less of good X and more of good Y
[3] consume less of both goods X and Y
[4] not change the consumption levels of goods X and Y

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ASSIGNMENT 04
Content: Topics 13 to 15
This is a self-assessment assignment.
Please do not submit the assignment.

4.1 The income a firm receives from the sale of its output is called

[1] total revenue.

[2] total gross profit.
[3] net profit.
[4] explicit cost.

4.2 Which of the following costs would be regarded as an implicit cost?

[1] the cost of raw materials

[2] wages, salaries and benefits paid to the employees of the firm
[3] the opportunity cost of financial capital invested in the firm
[4] interest paid on a loan that the firm obtained from a commercial bank

4.3 Suppose that for the year 2018, the firm "Your Wish is my Command" earned positive accounting
profit but negative economic profit. Which of the following is the most accurate interpretation of
this outcome? In 2018, the firm generated sales revenue that was

[1] greater than its implicit costs, but less than the sum of its implicit and explicit costs.
[2] greater than its explicit costs, and greater than the sum of its implicit and explicit costs.
[3] greater than its explicit costs, but less than the sum of its implicit and explicit costs.
[4] greater than it implicit costs, but less than its explicit costs.

Question 4.4 is based on the following table which indicates a firm's short-run production function.

Quantity of Total
Labour Product
0 0
10 100
20 230
30 340
40 410
50 460

25
4.4 What is the average product of labour when 20 units of labour are employed?

[1] 6,5 units

[2] 11,5 units
[3] 130 units
[4] 230 units

Question 4.5 is based on the following diagram.

4.5 The marginal product of the fifth unit of labour is

[1] 20
[2] 50
[3] 200
[4] 1 000

The following table contains some figures for a firm's total fixed cost (TFC), total variable cost (TVC),
and total cost (TC) for various output levels (Q). Use this information to answer questions 4.6 to 4.8.

Q TFC TVC TC
units/day R/day R/day R/day

5 4 100

10 3 300

15 8 100

20 8 100

25 2 600 13 700

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4.6 Average variable cost at Q = 20 units/day is

[1] R130/unit.
[2] R275/unit.
[3] R405/unit.
[4] R540/unit.

4.7 Total cost at Q = 10 units/day is

[1] R3 300/day.
[2] R4 100/day.
[3] R5 900/day.
[4] R7 400/day.

4.8 Over the output range from 20 to 25 units/day, the firm's marginal cost is approximately

[1] R444/unit.
[2] R535/unit.
[3] R548/unit.
[4] R600/unit.

4.9 In a perfectly competitive market,

[1] there can be few or many buyers and sellers .

[2] the price can be driven upward by suppliers holding back on goods and services.
[3] each participant is too small to affect the market price.
[4] government intervention is needed to ensure that prices are fair for consumers.

4.10 Economists assume that the goal of the firm is to

[1] maximise total revenue.

[2] maximise profits.
[3] minimise implicit costs.
[4] break even in the long run.

27
Question 4.11 is based on the following diagram which shows the marginal cost and average total cost
curves for a perfectly competitive firm.

4.11 If the market price is R10

[1] the firm earns R10 profit on each unit sold

[2] the firm earns R8 profit on each unit sold
[3] marginal revenue equals R10
[4] the firm is losing money in the short run

Question 4.12 is based on the following diagram.

4.12. The figure above shows cost curves for Benny’s Bookworms, a perfectly competitive firm. At
which point would Benny’s Bookworms close down?

[1] A
[2] B
[3] C
[4] D

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4.13 A monopoly is a

[1] large number of producers each with a small share of the total market output.
[2] single seller of a product that has no close substitutes.
[3] small group of producers with similar products.
[4] single buyer of raw materials.

4.14 To maximise profit, a price-taking firm hires workers up to the point at which the value of the
marginal revenue product of labour equals

[1] marginal cost.

[2] total revenue.
[3] the wage rate.
[4] the output price.

4.15 Assuming that the minimum wage is a binding price floor in the market for unskilled labour, we
would expect to see an increase in ___________ if the minimum wage law was repealed.

[1] a the number of people seeking employment as unskilled workers

[2] the wages of unskilled workers
[3] unemployment among unskilled workers
[4] employment of unskilled workers

29
8.2 SECOND SEMESTER ASSIGNMENTS

ASSIGNMENT 01
UNIQUE NUMBER 719305
Due date: 24 Augustus 2020
Content: Topics 1 to 5
Weight: 20% of your semester mark
Submit: Via myUnisa or on a mark-reading sheet

1.1 Scarcity exists

[1] when things are available only in small quantities.

[2] when resources are insufficient to produce all the desired goods and services.
[3] only among poor people who cannot afford to buy the things they want.
[4] in underdeveloped countries but not in advanced countries.

1.2 Economists work on the premise that

[1] resources are unlimited but wants are limited.

[2] resources are limited but wants are unlimited.
[3] both resources and wants are unlimited.
[4] both resources and wants are limited.

1.3 The four main categories of resources are

[1] labour, land, money, and capital.

[2] entrepreneurship, land, raw materials and labour.
[3] raw materials, money, labour and capital.
[4] land, capital, labour and entrepreneurship.

1.4 Opportunity cost is the _______ alternative forfeited when a choice is made.

[1] least-valued
[2] highest-valued
[3] most recently considered
[4] most convenient

1.5 According to economists, one reason why few professional athletes have PhDs is that the
___________ of going to university is too high.

[1] opportunity cost

[2] marginal benefit
[3] marginal cost
[4] comparative cost
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1.6 Consider an economic model designed to analyse the purchasing decisions of households. An
assumption that a household chooses between only two goods would be an example of a
__________ assumption.

[1] simplifying
[2] microeconomic
[3] financial
[4] positive

1.7 Which of the following would be a microeconomic topic?

[1] a general rise in interest rates

[2] a drop in inflation
[3] a drop in the country's unemployment rate
[4] an increase in the price of Toyota minibuses

1.8 "Senior citizens deserve an income that will enable them to live in comfort for their remaining
years." This is

[1] neither a normative nor a positive statement.

[2] strictly a macroeconomic issue.
[3] a positive statement.
[4] a normative statement.

1.9 Due to a scarcity of resources,

[1] every society must undertake central planning.

[2] the government must decide how to allocate available resources.
[3] some members of each society must live in poverty.
[4] every society must choose among competing uses of available resources.

1.10 The three primary systems for allocating resources are

[1] tradition, command and central planning.

[2] tradition, central planning and communism.
[3] command, market and socialism.
[4] tradition, command and market.

1.11 In a market system, prices are determined by

[1] corporate executives.

[2] government bureaucrats.
[3] supply and demand.
[4] production costs.

31
1.12 A society that is producing its maximum combination of goods and using all available resources for
production

[1] has minimised its opportunity cost.

[2] has maximised its opportunity cost.
[3] is operating on its production possibilities curve.
[4] has eliminated scarcity.

1.13 If the economy is producing a combination of goods inside its production possibilities curve,

[1] the opportunity cost of producing more output is greater than the value of the additional
output that could be produced.
[2] a significant number of workers have little education.
[3] some resources are being wasted.
[4] technology must improve before output can increase.

1.14 If an economy's production possibilities curve shifted to the right, this would illustrate

[1] a rise in resource utilisation.

[2] decreasing opportunity cost.
[3] a fall in resource utilisation.
[4] economic growth.

1.15 Along a country's production possibilities curve,

[1] the level of technology is changing.

[2] more of one good can be produced without giving up some of the other good.
[3] resources are not being fully utilised.
[4] available resources are being used efficiently.

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ASSIGNMENT 02
UNIQUE NUMBER 817792
Due date: 14 September 2020
Content: Topics 6 to 8
Weight: 40% of your semester mark
Submit: Via myUnisa or on a mark-reading sheet

2.1 The downward slope of a demand curve reflects that

[1] price is positively relative to quantity supplied.

[2] there is an inverse relationship between price and quantity demanded.
[3] as price increases, consumers willingly buy more.
[4] an increase in income will reduce desired purchases and consumption.

2.2 The quantity demanded of a good will increase if

[1] the price of the good decreases.

[2] the price of a substitute good decreases.
[3] average household income decreases (assuming the good is a normal good).
[4] the price of a complement good increases.

2.3 Which of the following would cause an upward shift in the supply curve for a good?

[1] an increase in the price of the good.

[2] an increase in the price of an input.
[3] an increase in demand.
[4] a cost-saving technological innovation.

2.4 Airline tickets and luggage are complements if

[1] the demand for luggage increases when the price of airline tickets falls.
[2] the supply of luggage increases when the price of airline tickets rises.
[3] the demand curves of both goods shift when their respective supply curves shift.
[4] the demand for luggage and airline tickets rise and fall together.

33
Question 2.5 is based on the following table.

Price Quantity demanded Quantity supplied

R10,00 10 100

R8,00 20 80

R6,00 30 60

R4,00 40 40

R2,00 50 20

R0,00 60 0

2.5 If the price of this good is R2,00, there would be a _________ of _________ units.

[1] shortage; 30
[2] surplus; 30
[3] shortage; 50
[4] surplus; 20

2.6 When there is a surplus in a market,

[1] price is below the equilibrium level.

[2] there is excess demand.
[3] there is downward pressure on price.
[4] producers sell more than the equilibrium quantity.

2.7 A technological advancement for Good A will shift the _________ curve of Good A to the
_________, leading to a(n) ___________in the equilibrium price.

[1] demand; left; decrease

[2] supply; right; decrease
[3] demand; right; increase
[4] supply; left; increase

2.8 The market for Good A is in equilibrium. If there is a decrease in the price of an input used to
produce Good A, the impact on the market for Good A will be

[1] a decrease in equilibrium price but no change in equilibrium quantity.

[2] a decrease in equilibrium price and a decrease in equilibrium quantity.
[3] a decrease in equilibrium price and an increase in equilibrium quantity.
[4] no change in equilibrium price but an increase in equilibrium quantity.

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2.9 The market for pencils is in equilibrium. If the price of pens (a substitute for pencils) increases the
impact on the market for pencils will be ___________ in equilibrium price and __________ in
equilibrium quantity.

[1] a decrease; a decrease

[2] a decrease; an increase
[3] an increase; a decrease
[4] an increase; an increase

Question 2.10 is based on the following diagram of the market for ground beef.

2.10 Consider the market for ground beef is initially in equilibrium at Point J. Assume that ground beef
is an inferior good. Which of the following could explain a movement to a new equilibrium at Point
M?

[1] a change in tastes away from hamburgers combined with an increase in the price for cattle
feed
[2] an increase in buyers' incomes combined with a cost-saving technological improvement
[3] a decrease in the price of hotdogs combined with an increase in the price for labour
[4] a decrease in buyers' incomes combined with a decrease in the number of acres owned by
cattle ranches

2.11 If the demand for motor vehicles decreases due to a drop in consumer income and at the same time
increases in factor prices cause the supply of motor vehicles to decrease, the prices of motor
vehicles will

[1] be impossible to determine from the information given.

[2] remain the same.
[3] decrease.
[4] increase.

35
2.12 When the supply of coffee decreases as a result of adverse weather conditions and the demand for
coffee increases due to an increase in the preference for coffee, the price of coffee will

[1] decrease.
[2] first increase and then decrease as demand decreases with the increase in price.
[3] either increase or decrease.
[4] increase.

2.13 Consumer surplus is

[1] the consumer's willingness to pay for the good.

[2] the total Rand value of a good to a consumer.
[3] the quantity of a good that a consumer gets but does not have to pay for.
[4] the difference between the willingness to pay for a good and the amount that is actually paid
to get it.

2.14 The Rand values of willingness to pay for an ice cream for Storme, Pinky and Judy are R3,00,
R2,75 and R2,25 respectively. If the price of an ice cream were R2,50,

[1] all three would buy.

[2] only Storme and Pinky would buy.
[3] only Judy would buy.
[4] only Storme would buy.

2.15 When price falls in a market, total consumer surplus increases because

[1] consumers who would have been willing to buy the good at the original price are now better
off.
[2] the demand curve shifts to the right as new consumers enter the market and receive some
consumer surplus.
[3] total expenditure on the good decreases.
[4] producer surplus decreases.

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ASSIGNMENT 03
UNIQUE NUMBER 733269
Due date: 5 October 2020
Content: Topics 9 to 12
Weight: 40% of your semester mark
Submit: Via myUnisa or on a mark-reading sheet

3.1 A government-imposed maximum price at which a good can be sold is called a price

[1] floor.
[2] ceiling.
[3] support.
[4] suspension.

Question 3.2 is based on the following diagram of the market for fish.

3.2 If the government were to adopt a price ceiling policy at a ceiling of R53/kg,

[1] price and quantity will stay the same.

[2] both price and quantity sold will fall.
[3] price will rise and quantity will fall.
[4] price will fall and quantity will rise.

3.3 Price ceilings are primarily targeted to help __________, while price floors generally benefit
__________.

[1] producers; no one

[2] consumers; producers
[3] increase tax revenue for governments; consumers
[4] producers; consumers

37
3.4 Price elasticity of demand gives us a measure of how sensitive or responsive the ________ of a
good or service is to a change in the _________ of a good service.

[1] price; quantity demanded

[2] demand; price
[3] quantity demanded; price
[4] price; demand

3.5 A perfectly inelastic demand curve is

[1] horizontal.
[2] vertical.
[3] a downward sloping straight line with a slope equal to -1.
[4] a curved line along which the product of price and quantity is constant.

3.6 The price elasticity of demand for petrol is generally considered to be inelastic. Which would be a
good reason why petrol is inelastic in the short run?

[1] It does not have a lot of good substitutes.

[2] It is relatively inexpensive as a portion of one’s total income.
[3] It takes consumers a while to adjust to a petrol price change.
[4] Firms can sell a lot of petrol at today’s prices.

3.7 If the owners of Ster Kinekor move theatres discounted the price of admission fees by 30 per cent,
average attendance would rise by 50 per cent. Based on this data, it could be concluded that the
price elasticity of demand for move tickets is

[1] elastic.
[2] inelastic.
[3] unitary elastic.
[4] perfectly elastic.

3.8 The demand for soybeans is inelastic. What would be the effect on the soybean market if the
number of soybean farmers decreases due to unfavourable farming conditions? The price of
soybeans would __________ and soybean growers' revenue would __________.

[1] increase; increase

[2] increase; decrease
[3] decrease; increase
[4] decrease; decrease

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Question 3.9 is based on the following diagram showing a demand curve for chicken.

3.9 Between Points L and M, the price elasticity of demand is __________ and demand is
__________. (Use the formula for arc elasticity.)

[1] 0,44; elastic

[2] 0,44; inelastic
[3] 2,25; elastic
[4] 2,25; inelastic

3.10 The income elasticity of the demand for shoes is 0,6. Shoes are

[1] a normal and necessary good.

[2] a normal and luxury good.
[3] an inferior and necessary good.
[4] a normal but inferior good.

3.11 If the cross elasticity of demand between two goods is negative,

[1] the two goods are complements.

[2] the two goods are substitutes.
[3] one of the goods must be a necessity.
[4] one of the goods must be inferior.

3.12 Utility is best defined as

[1] the usefulness of a good or service.

[2] satisfaction from consuming the good or service.
[3] the price a consumer is willing to pay for a good or service.
[4] the additional satisfaction derived from consuming a good or service.

Question 3.13 is based on the following data about Thea’s consumption of coffee and tea.
39
 Quantity Coffee Tea

MU÷P MU÷P
MU MU
(R6) (R4)

1 30 5 48 12

2 24 4 40 10

3 18 3 32 8

4 12 2 16 4

5 6 1 12 3

3.13 If her income is R30, the price of coffee is R6 and the price of tea R4, how many cups of coffee
must she buy to reach maximum satisfaction?

[1] 4
[2] 3
[3] 2
[4] 1

3.14 If diminishing marginal utility holds, and a person consumes less of a good,

[1] the price of the good will rise

[2] total utility will rise
[3] marginal utility will rise
[4] expenditure on the good will increase

3.15 If MUx/Px exceeds MUy/Py, the consumer should

[1] consume more of good X and less of good Y

[2] consume less of good X and more of good Y
[3] consume less of both goods X and Y
[4] not change the consumption levels of goods X and Y

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ASSIGNMENT 04
Content: Topics 13 to 15
This is a self-assessment assignment.
Please do not submit the assignment.

4.1 Economists normally assume that the goal of a business firm is to

[1] maximise revenue.

[2] minimize cost.
[3] maximise profit.
[4] maximise exposure.

4.2 The long run refers to the period of time for which

[1] a fixed input exists.

[2] all inputs are variable.
[3] marginal costs are decreasing.
[4] fixed costs are positive.

4.3 Suppose that for the year 2017, the firm Maartin's Marbles generated revenue of R1 850 million and
incurred explicit costs of R1 250 million and implicit costs of R450 million. For the year 2017,
Maartin’s Marbles had accounting profit of __________ and economic profit of __________.

[1] R600 million; R1 400 million

[2] R150 million; R600 million
[3] R600 million; R150 million
[4] R1 400 million; R600 million

4.4 In a factory of fixed size, Lindani is able to produce 1 500 wooden toy trucks per day when he
employs 2 workers, 2 500 wooden toy trucks per day when he employs 3 workers and 3 200
wooden toy trucks per day when he employs 4 workers. When Lindani employs 5 workers, he can
produce __________ wooden toy trucks per day.

[1] 3 800
[2] 5 700
[3] 6 400
[4] 7 200

41
Complete the following table and use the data to answer questions 4.5 to 4.7.

Output Total cost Marginal Average Average Average

(units) (R) cost fixed cost variable cost total cost
(R) (R) (R) (R)
0 100
1 110
2 130
3 166
4 220
5 300

4.5 The marginal cost of the fourth unit is

[1] 10
[2] 20
[3] 36
[4] 54

4.6 The average fixed cost of the fifth unit is

[1] 10
[2] 20
[3] 50
[4] 100

4.7 The average variable cost of the third unit is

[1] 11
[2] 22
[3] 30
[4] 33

4.8 In the case of profit maximising firms, price

[1] equals average fixed cost.

[2] equals marginal cost.
[3] exceeds marginal revenue.
[4] equals average variable cost.

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4.9 If a perfectly competitive firm’s marginal cost is greater than its marginal revenue at its current
level of production, what must the firm do to increase its profit?

[1] Reduce the price of its product.

[2] Decrease its output.
[3] Increase the price of its product.
[4] Increase its output.

4.10 The long-run result of producing where P = MC in an industry where there is free entry or exit is

[1] negative economic profit.

[2] zero economic profit.
[3] inefficient production.
[4] positive economic profit.

Use the figure below to answer questions 4.11 and 4.12. The figure shows the short-run conditions of a
firm in a perfectly competitive market.

4.11 The firm is making

[1] an economic profit of R105 125.

[2] an economic loss of R83 375.
[3] a normal loss of R21 750.
[4] an economic profit of R21 750.

43
4.12 In the long run, __________ firms will _________ the industry so that the market supply curve
shifts to the ___________ until prices ________ sufficiently so that all firms make a normal profit
only.

[1] existing firms; exit; right; decrease

[2] new firms; enter; right; decrease
[3] existing firms; exit; left; increase
[4] new firms; enter; left; increase

4.13 In a perfectly competitive market, there are

[1] many buyers and many sellers who can each affect the price of the good.
[2] many buyers and sellers, and no single participant can affect the price of the good.
[3] a few buyers or sellers who can each affect the price of the good.
[4] many buyers and a few sellers, and a single seller can affect the price of the good.

4.14 A profit-maximising producer will hire labour to the point where

[1] marginal revenue product equals the wage rate.

[2] marginal revenue equals zero.
[3] labour and capital costs are equalised
[4] its marginal product equals marginal revenue.

4.15 If the government imposes a minimum wage at a level above the labour market's equilibrium wage,

[1] the quantity demanded of labour will be greater than the quantity supplied.
[2] the quantity demanded of labour will be less than the quantity supplied.
[3] anyone who wants a job at the minimum wage will be able to find one.
[4] employers will face a shortage of willing workers.

44