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ASSIGNMENT 1: ECONOMIC PRINCIPLES

(ECOP101B)

SEMESTER: ONE

STUDY UNITS COVERED: STUDY UNITS 1 TO 7

SUBMISSION DEADLINE: 23:59 ON 22 APRIL 2020

FOR COMPLETION ON ELEARN

TOTAL MARKS: 65

MATERIAL SUPPLIED: NONE

© IMM Graduate School

Assignment One: 1st Semester 2021 ECOP101B
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INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING

ASSIGNMENTS

1. You must submit TWO assignments for this module.

2. This assignment will count out of 65 marks. And assignment 1 & 2 will contribute 40% towards the
final module mark. The remaining 60% will be contributed by the examination, however, the
examination papers will count out of 100 marks.
3. Examination entrance is not dependent on students submitting an assignment.
4. The assignment due date refers to the day up to which assignments will be accepted for marking
purposes. The deadline is 23:59 on the assignment due date. NO Late assignment submissions
will be accepted
5. All Assignments must be submitted in four steps on eLearn:
1. Prepare your work for submission (Converting a Word document into a PDF document).
2. Receive a Similarity Report from Turnitin, “Check my work for similarity,” activity.
3. Review the Similarity Report (review your work where report indicates similarities).
4. Upload the Similarity Report (generated by following step 1) for marking.

NB: Your Assignment will not be marked if you do not follow the steps outlined above.
No other documents such as Word or PPT will be accepted.

6. If you fail to follow these instructions carefully, the IMM Graduate School cannot accept responsibility
for the non-marking of the Assignment.

7. Important Notes:
● If your submission document is suspected of possible syndication or plagiarism you will
receive zero and disciplinary action will be taken against you.
● If there is any indication that answers were shared amongst students via any
communication channel including Internet or social media the students involved will
receive zero and disciplinary action will be taken against all parties involved.
● Answers provided should be in your OWN words. If it is merely a ‘copy and paste’ from a
textbook or any online or other source zero marks will be awarded.

There is no word limit on the Assignment submission, however students are encouraged to produce a
concise, well-formulated assessment, in a neat and properly structured format.

8. Spellcheck your Assignment using English (South Africa) or English (UK).

STUDY GUIDE
This assignment covers Study Units 1 to 7 of your study guide – IMM Graduate School.
(2020) Learner guide for Principles of Economics (ECOP101) South Africa: IMM
Graduate School.

● It is only when you use your own words that the markers are able to establish
whether you understand the concepts outlined in the study notes. The markers are
then in a better position to offer you constructive feedback. Students are therefore
required to provide their own interpretation of the questions and concepts. Simply
rewriting from the study guide or a textbook will not result in any marks being
awarded.
● Students are reminded that this is an individual effort and group submissions will be
penalised.

© IMM Graduate School

Assignment One: 1st Semester 2021 ECOP101B
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Answer ALL the questions

SECTION 1 [20]

1. Distinguish between microeconomics and macroeconomics and provide two (2)

examples of microeconomic issues and two (2) examples of macroeconomic
issues in South Africa today. (6)

Refer to the following graph and answer the questions that follow:

2. Describe point ‘H’ on the graph. (4)

3. Describe point ‘G’ on the graph. (4)

4. Describe what would happen to the graph above if excessive rain destroyed
some of the potato crop for that year. (1)

5. Explain why economics uses the term ‘ceteris paribus’ when developing a
theory. (1)

6. Which of the following can be classified as capital (as a factor of production)?

Explain your answer in each case.

a) The amount of money invested by foreigners on the JSE.

b) The amount of money in Mr Mabaso’s savings account.
c) A lawnmower owned by a garden services company.
d) A building that houses lecture halls at a university.
(4)

© IMM Graduate School

Assignment One: 1st Semester 2021 ECOP101B
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SECTION 2 [20]

7. Explain (do not draw), using examples, how each of the following determinants
will influence the demand for pencils.

a) Px
b) Pg
c) T
d) N (4)

8. Explain (do not draw), using examples, how each of the following determinants
will influence the supply of pencils.

a) Px
b) Pg
c) Pf
d) N (4)

Refer to the following graph and answer the questions that follow:

S1
Price of
milk S2
b

g
D2
h
D1
0
Quantity of milk (litres per day)

9. Which movement along and/or shift of the curve indicates a decrease in the
supply of milk? (1)

10. Which movement along and/or shift of the curve indicates an increase in the
labour cost of farm workers on milk farms? (1)

11. Which movement along and/or shift of the curve indicates an increase in the
price of milk on the quantity demanded? (1)

12. Which movement along and/or shift of the curve indicates an increase in the
price of soya milk (a substitute in consumption for milk)? (1)

13. Which movement along and/or shift of the curve indicates that the consumers of
milk expect the price of milk to decrease? (1)
© IMM Graduate School
Assignment One: 1st Semester 2021 ECOP101B
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14. Which movement along and/or shift of the curve indicates the impact of a
decrease in the price of milk on the quantity supplied? (1)

15. Which movement along and/or shift of the curve indicates an increase in the
number of milk producers? (1)

16. Which movement along and/or shift of the curve indicates a cost-saving
technological improvement in the production of milk? (1)

17. Which movement along and/or shift of the curve indicates the government
increases its subsidy to milk farmers? (1)

18. Which movement along and/or shift of the curve indicates an increase in the
population consuming milk? (1)

19. Which movement along and/or shift of the curve indicates an increase in
consumer income? (1)

20. Which movement along and/or shift of the curve indicates an increase in the
price of coffee (a complement in consumption for milk)? (1)

SECTION 3 [10]

21. Suppose the price elasticity of the demand for overseas holidays is 1,8.

a) What does this mean? (1)

b) Give a possible reason why the elasticity coefficient in this particular case
is greater than one. (1)

c) Explain what will happen to the total revenue of the suppliers of overseas
holidays if the price of such holidays increases. (2)

22. Suppose the price elasticity of the demand for food is 0,6.

a) What does this mean? (1)

b) Give a possible reason why the elasticity coefficient in this particular case
is less than one. (1)

c) Explain what will happen to the total revenue of the suppliers of food if the
price of food increases. (2)

23. Explain the difference between a normal good and an inferior good. (2)

© IMM Graduate School

Assignment One: 1st Semester 2021 ECOP101B
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SECTION 4 [15]

Use the following table that shows the short-run production function of a
cricket ball manufacturer and answer questions 24 to 26.

Number of Number of Output

machines workers (cricket balls/day)
8 0 0
8 1 60
8 2 140
8 3 230
8 4 300
8 5 340
8 6 360

24. What is the average product of labour when two workers are employed? (1)

25. What is the marginal product when six workers are employed? (1)

26. With which workers do diminishing marginal returns set in? (1)

Complete the following table and use the data to answer questions 27 to 33 below:

A firm produces a product that sells in a perfectly competitive market at R60 per unit.
The firm’s cost structure is as follows:

Unit Total fixed Total Total Average Marginal

produced cost variable cost (total) cost cost
(no.) (R) cost (R) (R) (R)
(R)
0 24 24
1 16
2 50
3 108
4 52
5 44
6 282

27. What is the total variable cost of four units? (1)

28. What is the total cost of five units? (1)

29. What is the average (total) cost of two units? (1)

30. How much is the marginal cost of three units? (1)

31. How many units should the firm produce and sell to maximise its profit? (1)
© IMM Graduate School
Assignment One: 1st Semester 2021 ECOP101B
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32. Which columns obey the law of returns? (1)

33. At which number of units is the firm most efficient in terms of total cost per item
produced? (1)

Refer to the following graph showing a perfectly competitive firm in

the short run to answer questions 34 to 38.

[A/w: Cost price (rand)]

34. What is the equilibrium quantity for this firm? (1)

35. What will the firm’s total revenue be at equilibrium? (1)

36. If the firm produces 80 units and the market price is R20, what kind of profit
will this producer make? (1)

37. At what price should the firm shut down? (1)

38. If the market price drops to R12, how many products should the producer
make to maximise his profit? (1)

ASSIGNMENT TOTAL: 65

© IMM Graduate School

Assignment One: 1st Semester 2021 ECOP101B