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QUESTION 1 Answer the following questions Only write down the numbers ex 1.1 A. Study TABLE 1 and answer the questions that follow: TABLE 1 PRICE (in Rand) QUANTITY DEMANDED QUANTITY SUPPLIED 2 160 80 4 140 100 6 120 120 8 100 140 10 80 160 12 60 180

1.1 In TABLE 1, the equilibrium price is ... A R12 B R4 C R6 D R8

1.2 A Market shortage will exist if ... A the price is above the equilibrium position B the price is below the equilibrium position C there is too many suppliers D ALL of the above-mentioned

1.3 The additional utility derived from consuming an additional unit of a product is referred to as .. . utility... A diminishing B marginal C total D average

1.4 A point inside the production possibility curve represents ... A an inefficient use of resources B unemployment C underemployment D ALL the above-mentioned 1.5 If an increase in the price of product A causes the demand curve for product B to shift to the right, then ... A A and B are compliments B the price of A must be higher than the price of B C B must be a normal product D A and B are substitutes 1.6 If the consumer 's demand for fish increased because of an increase in the price of lamb, these products are examples of ... A inferior B normal C substitute D complimentary

user D:20120903231345+02'00'2012/09/03 11:13:45 PM -------------------------------------------- 1.4 D. correct answer Q1 = 9/10

user D:20120903233317+02'00'2012/09/03 11:33:17 PM -------------------------------------------- grand total 74/150 = 49 %

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1.7 If the price of a product increases it causes a ...

A shift of the demand curve to the right B movement along the demand curve C decrease in the elasticity of demand D shift of the demand curve to the left

1.8 The concept opportunity costs ... A can be applied to the analysis of any decision-making process B is relevant only to Economics C refers only to actual payments and income D applies to consumers but not firms

1.9 The fact that a decline in the price of a product causes producers to reduce the quantity of the product A the law of supply B the law of demand C a change in supply D a change in demand

1.10 When economists speak of normal goods they mean ... A manufactured goods with no defects B goods people usually buy C goods of which the marginal utility decrease as consumption increases D goods of which the quantity demanded increases with rising incomes (10X1=10) (10)

QUESTION 2 Use the information in the table below and answer the questions that follow: TABLE 2 Price per square metre in Rand : Quantity demand of solar panels per year in .. thousands Quantity supplied of solar panels per year in thousands 100 5 40 80 15 25 70 20 20 60 25 15 40 40 10

2.1 Illustrate the demand and supply schedule graphically on one graph. (11) 2.2 user

D:20120903231500+02'00'2012/09/03 11:15:00 PM -------------------------------------------- you should have included the number in table on the respective axis on your graph

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Determine the equilibrium price and quantity from the graph. (2) R70

2.3 Calculate the elasticity of supply if the price of solar panels increases from R80 to R100 per square meter.

Elasticity of Supply = % ∆ in quantity supplied / % ∆ in price

= 60%/25% = 2.4

The quantity demanded increases with 10 units at each price level. 2.5 What is the NEW equilibrium price? (1) If the price increases from 70 to 80, the quantity demanded drops to 15

2.6 What is the NEW equilibrium quantity? (1) (25)

QUESTION 3 3.1 Explain the 5 types of price elasticity of demand with the help of graphs. (5x3=15)

The five types of elasticity of demand:

1. Perfectly elastic demand: any increase in price causes the demand of the product to drop to zero. 2. Perfectly inelastic demand: a change in the price level of the product does not affect the demand at all.

user D:20120903231733+02'00'2012/09/03 11:17:33 PM -------------------------------------------- equilibrium qtty is 20 you havent included it Q2 = 15/25

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3. Relatively inelastic demand: the change in quantity demanded is less than the change in the price. 4. Relatively elastic demand: the change in quantity demanded is more than the change in price. 5. Unitary elastic demand: the change in the price of the good is equal to the change in the quantity demanded.

3.2.1 Study the graph below and answer the questions that follow. Apples L Bananas 3.2.1 What are curves 1,, l2 and l3 called? (2) 3.2.2 The curves are known as indifference curves What do these curves represent? (2) The curves determine the utility of a basket of goods. At any point on the curve, the consumer is indifferent: he has the same utility along the entire curve. 3.2.3 What is line LK called? (2) 3.2.4 Which point represents consumer equilibrium explains? Explain. (4) The point where demand curve and supply curve interact is the consumer equilibrium. (25)

QUESTION 4 Indicate whether the following are characteristics of a free-market system or a command system. Write only the correct answer next to the question number, for example 4.6 Free- market. 4.1 The central government owns and controls almost all means of production. Command Market 4.2 The price mechanism plays an important role in the solution to economic problems. Free Market 4.3 The consumer does not buy goods that he/she dislikes. Free Market 4.4 Expected profits and possible losses are the only reason for the expansion of decreasing of economic activities. Free Market

4.5 The price of goods is fixed by the state. (5 X 1 = 5) (5) Command Market

QUESTION 5 5. Use each scenario below to indicate graphically how the equilibrium price and - quantity of motor vehicles will change. Also provide a brief motivation for each graph 5.1.1 The interest rate in the South African economy has decreased by 4,5% during the past six months

user D:20120903231950+02'00'2012/09/03 11:19:50 PM -------------------------------------------- the question says with the help of graphs, where are your graphs? Q3= 12/25

user D:20120903232014+02'00'2012/09/03 11:20:14 PM -------------------------------------------- Q4 = 5/5

5

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

Jan Feb Mar Apr May Jun

South African Output decreasing from 9% to 4.5% over the six month period.

5.1.2 The motor manufacturers increase their investment in capital goods

35%

30%

25%

20%

15%

10%

5%

0% 2010 2011

Increase in investment in capital goods from 20% to 30% y-o-y.

5.1.3 Kumba has increased the price of steel by 15% and as a result they are charging similar prices for steel than their international competitors

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G D

P %

S

te e l P

ri c e

i n

U S

D

Steel Price in USD

1200

1150

1100

1050

1000

950

900 1 2

Kumba increased the steel prices from 1,000 USD per tonne to 1,150 USD per tonne

5.1.4 The USA,Europe and Japan are expected to record increases in their economic growth rates during 2010 (4x3=12) (12)

6%

5%

4%

3%

2%

1%

0% 2009

US and Japan GDP Grow th Rates

US and Japan GDP growth rate increases from 4% to 5% in 2010.

QUESTION 6 6.1.1 Choose the statements from COLUMN B to match the term in COLUMN A. Write only the letter ( A- J) next to the question number (6.1.1. - 6.1.10.) for example 6.1.1.A. COLUMN A 6. 1 .1 Monopoly 6.1. 2 Short-term equilibrium 6.1 .3 Physical needs

user D:20120903232345+02'00'2012/09/03 11:23:45 PM -------------------------------------------- you did not understand the question. you merely had to used a simply downward sloping linear demand curve and upward sloping supply curve to show the scenarios!!!!!1 Q5 =0/12

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6.1.4 Perfect compet itive market 6.1.5 Marginal utility 6.1 . 6 Income elasticity 6.1 .7 Public sector 6.1.8 Macro-economics 6.1.9 Micro-economics 6 1 .10 E conomic growth COLUMIB A additional satisfaction from an additional unit of a product consumed B sensitivity of demand in relation to income C MC= lv11 D any process that results in a quantitat ive long-term change in an economic structure E a market where the seller is a price taker F that section of the economy that is controlled an d managed by the state on a local or national level G a study of broad aggregates that influences the whole economy H deals With aspects such as behav1our of consumers, changes in tastes and habits of consumers and price determination need for food clothing , housing J the supply of a commodity or service is controlled by a single person or group of people to such an extent that there can be little or no competition from anyone else. (10X1=10) 6.2 Name 4 characteristics of a perfect competitor. 6.3 Name 4 characteristics of a monopolist. (4 X 1 = 4) (4 X 1 = 4) (18) 1-J 2-C 3-I 4-E 5-A 6-B 7-F 8-G 9-H 10-D

QUESTION 7 7.1 Study the following graph and answer the questions that follow: FIGURE2 Capital goods 40 100 350 Consumer goods ('000) 7.1.1 If 40 thousand units of capital goods are currently produced, calculate the opportunity cost to produce 80 thousand units of capital goods. (Show ALL calculations.) (4)

user D:20120903232454+02'00'2012/09/03 11:24:54 PM -------------------------------------------- Q6 = 10/18 where is 6.2 and 6.3

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Ans. At 40000 units of Capital Goods= 350000 Units of Consumer Goods were produced At 80000 units of Capital Goods= 100000 Units of Consumer Goods were produced This means that to produce additional 40000 units of capital goods company has to forgo 250000 units of Consumer Good which is the opportunity cost for producing 80000 units of Capital Goods.

7.1.2 What does point X represent? (2) 7.1.3 Which point on the graph can only be attained through economic growth? (2) 7.1.4 What does the production possibility curve represent? (2) Ans. Production Possibilty curve represent various possibilities of production that can be achieved by the given resources. 7.2 7.2.1 Calculate the values of (a) , (b) and (c). (6) a. 50 b. 120 c. 20 7.2. 2 Which law is represented or illustrated by COLUMN 3? Ans. Diminishing Marginal Utility 7.3 Compare the perfect competitor and monopolist with one another. Use graphs.(20) Ans. Graphs to be prepared 7.4 ..... Is the basic economic problem. (2) Ans. Scarcity of resources (40)

QUESTION 8 Use the information in the table below to answer the questions that follow: QUANTITY TOTAL COST FIXED COST VARIABLE COST AVERAGE COST PROFIT 0 100 100 0 - -100 1 130 100 30 130 -90 2 155 100 55 77.5 -75 3 175 100 75 58.33 -55 4 196 100 96 49 -36 5 220 100 120 44 -20 6 250 100 150 41.67 -10 7 284 100 184 40.57 -4 8 324 100 224 40.5 4 9 370 100 270 41.11 10 8.1.1 Calculate the variable cost,average variable cost and average cost in tableform (10) Done in table above. 8.1.2 Determine where profit will be maximised in the short-run according to the marginal approach if the product sells at R40,00 per unit (2) 8.1.3 Illustrate the marginal approach and indicate on the graph the areas that represent an economic loss,normal profit and an economic profit (3}(15)

user D:20120903232659+02'00'2012/09/03 11:26:59 PM -------------------------------------------- I am meant to believe you omitted the graphs. Q7= 20/40

user D:20120903233003+02'00'2012/09/03 11:30:03 PM -------------------------------------------- where is the MC, the average cost is wrong because it cant be a negative value. AC= TC/Q I do not see the answers to 8.2 & 8.3

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FRANK ROODT Student number: 8069 - Comments

Assignment 2

Question 1

In this question you only got one wrong that 1.18, the answer is supposed to be D but you wrote A

Question 2

You did not include the graph hence you did not answer the question. You lost about 12marks

Question 3

All your formulas are wrong hence the figures for your answers are wrong. You lost 5marks. As an example I have provided you with two of the correct formulas

GNP @mp: GDP @ mp – net factor payments to foreign countries

NNP @ mp: GDP @mp –provision for depreciation-net factor payments to foreign countries

Question 4

You omitted the macro economic stability - Equitable distribution of national income. You lost 2 marks

Question 5

You lost 20 marks because you misunderstood the question. The types of unemployment are: frictional, structural, seasonal and cyclical. These are the ones you were supposed to discuss

Question 6

You lost 7 marks because you did not match the correct column A to column B. I have highlighted them in yellow.

Question 7

Your formulas are still incorrect.

Question 8

8.1 Who is the Minister of Finance, NOT the function. You were just supposed to mention his name

8.3 Said in table format and you did not include a table at all

Q1 = 19/20

Q2 = 0/12

Q3 = 0/5

Q4 = 8/10

Q5 = 3/23

Q6 = 3/10

Q7 = 1/5

Q8 = 5/15

Total = 39/100 - 39%

My comment is read more and please make sure you understand the question before answering it.

Assignment 1

Question 1

1.4 is incorrect. The correct is D

Question2

You lost marks because you did not include the figures in the graph you draw

Question 3

3.1 You lost marks because you did not draw graphs, the question says with the aid of GRAPH. You only wrote

Question 4

Everything is correct

Question5

You lost 12 marks on this question because you misunderstood the question. You were only expected to use a simple demand and supply and say what which of the two shifts. Read chapter 8 in the text book

Question 6

You did not answer 6.2 and 6.3

Question 7

You lost marks 20 because you did not include graph in your comparison of monopoly and perfect competition.

Question 8

You did not include the MC column also your AC cost is wrong, AC=TC/q

You also did not include answers to 8.2 and 8.3

Q1 = 9/10

Q2 = 15/25

Q3 = 12/25

Q4 = 5/5

Q5 = 0/12

Q6 = 10/18

Q7 = 20/40

Q8 = 3/15

Total = 74/150 - 49%