ECS1501/101/3/2018

Tutorial Letter 101/3/2018

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 AND CONTACT DETAILS ................................................................. 3

3.1 Lecturer and Department ................................................................................... 3
3.2 University ........................................................................................................ 4

4 RESOURCES .................................................................................................... 4
4.1 Prescribed textbook ........................................................................................... 4
4.2 Study guide and tutorial letters ........................................................................... 4
4.3 myUnisa.. ........................................................................................................ 5
4.4 E-tutors .. ........................................................................................................ 5
4.5 Face-to-face tutors ............................................................................................ 6

5 STUDY PLAN ................................................................................................... 6

5.1 First semester ................................................................................................... 7
5.2 Second semester............................................................................................... 8
6 ASSESSMENT .................................................................................................. 8
6.1 Assignments ..................................................................................................... 8
6.1.1 Due dates for assignments ............................................................................... 9
6.1.2 Submitting assignments ................................................................................... 9
6.1.3 Assignment marks ..........................................................................................10
6.2 Examinations ...................................................................................................11
6.2.1 Examination admission ...................................................................................11
6.2.2 Examination paper format ...............................................................................11
6.2.3 Examination script reviews or re-marks .............................................................11
6.2.4 Marks ... .......................................................................................................11

7 CONCLUSION ................................................................................................ 12

8 ASSIGNMENTS.............................................................................................. 13
8.1 FIRST SEMESTER ASSIGNMENTS .......................................................................13
8.2 SECOND SEMESTER ASSIGNMENTS ....................................................................36

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 ECS1501/101

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 basic microeconomic concepts
and principles. The purpose of this module is to gain insight into the solving of basic
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 learning unit.

3 LECTURER AND CONTACT DETAILS

3.1 Lecturer and Department

Direct all academic enquiries about the content of this module (i.e. not administrative
queries) to us. Ensure that you have your study material and student number with you
when you contact us. You can use the following e-mail addresses to contact the
department:

• First Semester ecs1501-18-s1@unisa.ac.za

• Second Semester ecs1501-18-s2@unisa.ac.za

You may also contact the administrative coordinator at the Department of Economics, Mrs
Mpho Mudau, at 012 433 4686.

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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.

You can also send you enquiry directly to the following addresses:

• assign@unisa.ac.za, for assignments queries

• despatch@unisa.ac.za, for study material queries
• exams@unisa.ac.za, for queries on the examination
• finan@unisa.ac.za, for account queries
• Study-info@unisa.ac.za, for application and registration queries
• myLifeHelp@unisa.ac.za, for assistance with myLife e-mail accounts
• MyUnisaHelp@unisa.ac.za, for assistance with myUnisa

4 RESOURCES

4.1 Prescribed textbook

Your prescribed textbook for this module year is
Mohr, P & associates. 2015. Economics for South African
students. 5th edition. Pretoria: Van Schaik.

You can obtain the prescribed book from the official booksellers of
the University. Refer to the list of official booksellers and their
addresses, which are listed in the my Studies @ Unisa brochure. If
you have difficulty locating your book at these booksellers, contact
the Prescribed Book Section at 012 429 4152 or send an e-mail
to vospresc@unisa.ac.za

Those of you have a copy of the 4th edition of the prescribed textbook may use it. However,
all study material in this module are based on the 5th edition. Thus, if you see a page
reference in the study material, it will refer to the 5th edition of the prescribed textbook.

4.2 Study guide and tutorial letters

The study guide covers all the academic content of the module, refers you to the
prescribed textbook and gives some additional explanations. It is not necessary to study
any work other than that specified in the study guide document.
It is imperative for your own success to read all the tutorial letters immediately.

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 ECS1501/101

• 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 (these tutorial letters will only be available after the closing date of
the specific assignment).

4.3 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 ECS1501-18-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.
We will communicate with you on the main module site. On this site, you
will receive online lectures (under Learning Units). 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 the study guide, all the tutorial letters and examination papers of
previous years under Official Study Material.

4.4 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 ECS1501-18-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 learning unit that will become available under
Additional Resources on the main module site (These have been developed to
take you through each learning unit and provide additional explanations where
necessary.)
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 • together with the above-mentioned slides, a quiz on each learning unit, 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 e-tutor groups.

4.5 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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 ECS1501/101

5.1 First semester

WEEK WEEK ACTIVITY

COMMENCING
1 29 January Work through learning unit 1 of the study guide.

2 5 February Work through learning unit 2 of the study guide.

3 12 February Work through learning unit 3 of the study guide.

19 February Closing date for Assignment 01.

4 19 February Work through sections 4.1 to 4.3 of learning unit 4

of the study guide.

5 26 February Work through sections 4.4 to 4.6 of learning unit 4

of the study guide.

6 5 March Work through sections 5.1 to 5.4 of learning unit 5

of the study guide.

12 March Closing date for Assignment 02.

7 12 March Work through sections 5.5 to 5.6 of learning unit 5

of the study guide.

8 19 March Work through learning unit 6 of the study guide.

9 26 March Work through learning unit 7 of the study guide.

2 April Closing date for Assignment 03.

10 2 April Work through learning unit 8 of the study guide.

11 9 April Work through learning unit 9 of the study guide.

12 16 April Work through learning unit 10 of the study guide.

23 April Closing date for Assignment 04.

13 23 April Revision.

14 30 April Revision.

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5.2 Second semester

WEEK WEEK ACTIVITY

COMMENCING
1 16 July Work through learning unit 1 of the study guide.

2 23 July Work through learning unit 2 of the study guide.

3 30 July Work through learning unit 3 of the study guide.

6 August Closing date for Assignment 01.

4 6 August Work through sections 4.1 to 4.3 of learning unit 4

of the study guide.

5 13 August Work through sections 4.4 to 4.6 of learning unit 4

of the study guide.

6 20 August Work through learning unit 5 of the study guide.

27 August Closing date for Assignment 02.

7 27 August Work through learning unit 6 of the study guide.

8 3 September Work through learning unit 7 of the study guide.

9 10 September Work through learning unit 8 of the study guide.

10 September Closing date for Assignment 03.

10 17 September Work through learning unit 9 of the study guide.

11 24 September Work through learning unit 10 of the study guide.

1 October Closing date for Assignment 04.

12 1 October Revision.

13 8 October Revision.

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 or 02. 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 all
the assignments.

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 ECS1501/101

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

Unique Learning units covered in

Assignment Due date
number assignment

01 596962 19 February Learning units 1, 2 & 3

02 787665 12 March Learning units 4 & 5.4

03 702580 3 April Learning units 5.5, 6 & 7

04 874385 23 April Learning units 8, 9 & 10

Semester 2 – assignment due dates

Unique Learning units covered in

Assignment Due date
number assignment

01 823799 6 August Learning units 1, 2 & 3

02 774772 27 August Learning units 4 & 5.4

03 788543 10 September Learning units 5.5, 6 & 7

04 626296 1 October Learning units 8, 9 & 10

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.
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.

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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
myUnisaHelp@unisa.ac.za.

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 and/or 02 which are
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 (which we do not recommend), 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 10% to your semester mark. Assignments 02 to 04 will each
contribute 30% to the semester mark. To calculate you year mark (semester mark) use the
following formula:
𝑌𝑌𝑌𝑌𝑌𝑌𝑌𝑌 𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚 = (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.1 × 0.1) + (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.2 × 0.3) + (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.3 × 0.3)
+ (𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑒𝑒𝑎𝑎𝑎𝑎𝑎𝑎.4 × 0.3).

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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
2018 and the supplementary examination in October/November 2018. If you are registered
for the second semester, you will write the examination in October/November 2018 and the
supplementary examination in May/June 2019.

6.2.1 Examination admission

For admission to the examination, you must submit Assignment 01 or Assignment 02.

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 A carries a total of 30 marks.
• Section B consists of multiple-choice questions and carries a total of 70 marks.

All the learning units 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 scripts@unisa.ac.za or if you
would like to apply for a re-mark, send an e-mail to remark@unisa.ac.za.

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 between 40% and 49%, you will not
pass ECS1501, but will qualify for a supplementary examination. Irrespective of the
semester mark obtained, you must obtain a subminimum of 40% in the examination.

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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%.

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 596962
19 February 2018
Due date:
Learning units 1 to 3
Content:
10% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Thabang Malatji.

1.1 Which one of the following statements is incorrect?

[1] Economics is the study of money.

[2] Economics is concerned with scarcity
[3] Economics can be described as the study of choice.
[4] Economics attempts to satisfy unlimited wants.

1.2 Opportunity cost refers to the value of

[1] all choices given up by individuals, firms and government.

[2] time forgone when a choice is made.
[3] the best alternative given up when a choice is made.
[4] all costs incurred when a choice is made.

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Use the following graph, which shows the production possibilities curve (PPC) of the
Wild Coast Community Farm, to answer questions 1.3 to 1.6.

1.3 If the Wild Coast Community Farm is producing at point H, which of the following
statements is incorrect?

[1] It is impossible to increase the production of one good without reducing the
production of the other good.
[2] Only 2 baskets of fish and 70 kg of potatoes are made available to consumers.
[3] The resources of Wild Coast Community Farm are not employed fully and
efficiently.
[4] It is possible to produce either more kilograms of potatoes or more baskets of
fish using the same available resources.

1.4 Points H, D and G in the graph can be classified respectively as __________ levels of
production.

[1] efficient, inefficient and possible

[2] possible, efficient and impossible
[3] possible, possible and possible
[4] impossible, efficient and impossible

1.5 If an improved technique for catching fish and farming potatoes is invented, the PPC
could shift in such a way that the Wild Coast Community Farm can produce ________

[1] more than 5 baskets of fish and only 100 kg of potatoes.

[2] less than 5 baskets of fish and 100 kg of potatoes.
[3] a maximum of 5 baskets of fish and 100 kg of potatoes.
[4] more than 5 baskets of fish and more than 100 kg of potatoes.

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1.6 What is the opportunity cost to Wild Coast Community Farm of moving from point E to
C?

[1] 45 kg of potatoes for 2 baskets of fish

[2] 2 baskets of fish for 45 kg of potatoes
[3] 2 baskets of fish for 85 kg of potatoes
[4] 85 kg of potatoes for 2 baskets of fish

1.7 Which of the following is an example of a microeconomic issue?

[1] an increase in the rate of economic growth in Sub-Saharan Africa

[2] the total production of goods and services in the South African economy
[3] the fluctuations in the price of petrol in South Africa
[4] comparison of the net exports between South Africa and Mozambique

1.8 Which of the following is a positive statement?

[1] In December 2015, the rand (ZAR) depreciated to a record low of R15 against
the US dollar.
[2] People with a degree in Economics make better decisions compared to those with
a degree in Logistics.
[3] The South African Reserve Bank’s repo rate of 7% is too high.
[4] An unemployment rate of 25% is more harmful than an inflation rate of 6%.

1.9 Which one of the following characterises the command system?

[1] Customs and beliefs inform economic behaviour.

[2] Economic activities are coordinated by the central authority.
[3] All factors of production are owned by the state.
[4] Decision-making is coordinated through the market mechanism.

1.10 What are the three major flows in the economy?

[1] total production, total expenditure and total savings

[2] total investment, total consumption and total production
[3] total spending, total production and total income
[4] total income, total spending and total savings

1.11 Which one of the following options correctly lists examples of stock variables?

[1] population, wealth and immigration

[2] deposits, interest, capital and bank reserves
[3] assets, liabilities and depreciation
[4] loans, population and bottled water

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1.12 If Maria invents a new product and sells it to retailers, what type of remuneration will
she earn?

[1] a wage
[2] income
[3] a profit
[4] interest

1.13 Total expenditure on production consists of

[1] total consumption expenditure, total capital formation, total government

expenditure and net export.
[2] total consumption expenditure, total household expenditure, total government
expenditure and net export.
[3] total consumption expenditure, total investment expenditure, transfer payment
and net export.
[4] total consumption expenditure, total private savings, total government
expenditure and net export.

Use the following diagram of the circular flow of income and spending to answer questions
1.14 and 1.15.

1.14 What do box A and arrow B represent?

[1] A = firms; B = spending on factors of production

[2] A = households; B = consumer spending on goods and services
[3] A = households; B = spending on factors of production
[4] A = households; B = income (wages, interest, etc)

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1.15 What does arrow C represent?

[1] spending by firms on factors of production

[2] spending by households on the factor market
[3] income (sales revenue) to firms, generated on the factor market
[4] income (profit) to households, generated on the factor market

As part of our drive to improve our service, we need to get a clearer picture of our student
profiles. To help us in this, please answer the following questions (1.16 to 1.20):

1.16 Did you have mathematics in high school?

[1] Yes, and I got more than 60%

[2] Yes and I passed
[3] Yes but I did not pass
[4] I only had Mathematical literacy
[5] No.

1.17 What is your home language?

[1] Zulu
[2] Sepedi
[3] Afrikaans
[4] English
[5] Other

1.18 Which of the following best descripts your internet access?

[1] I have unlimited Internet access on a computer or laptop.

[2] I have limited internet access on a computer or laptop.
[3] I only have internet access on my smartphone.
[4] I do not have any access to the internet.

1.19 Which of the following is true about you?

[1] I am a full time student.

[2] I am a part time student.

1.20 I would rather join module related discussion on Facebook than on the myUnisa
discussion forum.

[1] Agree.
[2] Disagree.

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 ASSIGNMENT 02
UNIQUE NUMBER 787665
12 March 2018
Due date:
Learning units 4 to 5.4
Content:
30% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Bernard Serfontein.

2.1 Which one of the following statements regarding the demand for a good or service is
correct?

[1] Demand is simply another term for wants. In other words, if a consumer
demands a good, it simply means that he or she wants the good.
[2] Peter who likes ice cream and has the ability to pay for it but is not willing to pay
for it is part of the demand for ice cream.
[3] You intend starting a business that supplies chicken burgers in your area. A
friend of yours mentions that he thinks it is a good idea because he knows that in
this area there are 5 000 people who like chicken burgers. This information is
sufficient to conclude that there is a high demand for chicken burgers in this
area.
[4] The demand for a product refers to the quantities of the product that potential
buyers are willing and able to buy.

2.2 In terms of the law of supply

[1] an increase in the cost of production decreases the supply.

[2] a decrease in the price of a good or service decreases the quantity supplied.
[3] an increase in demand increases supply.
[4] an increase in the price of a good or service decreases the quantity supplied.

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Questions 2.3 to 2.9 are based on the following data for ice cream:

Price Quantity demanded Quantity supplied

(P) (Qd) (Qs)

10 100 900

9 200 800

8 300 700

7 400 600

6 500 500

5 600 400

4 700 300

3 800 200

Use this data to draw the market for ice cream using the following diagram:

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2.3 According to the law of demand a decrease in the price of ice cream from R8 to R4

[1] will increase the quantity demanded by 400 since a negative relationship exists
between the price and quantity demanded.
[2] will increase the quantity demanded by 400 since a positive relationship exists
between the price and quantity demanded.
[3] will increase the equilibrium price since an increase in demand increases the
equilibrium price.
[4] will increase the quantity supplied by 400 since a positive relationship exists
between the price and quantity supplied.

2.4 If the price is higher than the equilibrium price

[1] An excess supply is created on the market which results in downward pressure
on the price as suppliers are trying to get rid of unsold stock.This process
continues until a lower market equilibrium price than R6 is reached.
[2] An excess demand is created which results in upward pressure on the price as
buyers are competing to get hold of the product. This process continues until the
market equilibrium price of R6 is reached.
[3] An excess supply is created on the market which results in downward pressure on
the price as supplier are trying to get rid of unsold stock. This process continues
until the market equilibrium price of R6 is reached.
[4] An excess demand is created which results in upward pressure on the price as
buyers are competing to get hold of the product. This process continues until a
higher market equilibrium price than R6 is reached.

2.5 Which one of the following events will probably cause a rightward shift of the demand
curve for ice cream?

[1] An increase in the price of a substitute for ice cream such as an ice drink.
[2] A decrease in the number of households.
[3] An increase in the number of ice cream suppliers.
[4] A decrease in the price of ice cream

2.6 It is a very hot summer and the demand for ice cream increases which causes an
increase in the equilibrium price to R8. Which of the following events is likely to have
taken place on the market?

[1] The supply of ice cream increased and the supply curve shifted to the right.
[2] The quantity of ice cream supplied increased and an upward movement along the
supply curve took place.
[3] The demand for ice cream decreased since the price is higher.
[4] At each price a lower quantity of ice cream was demanded.

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2.7 What will happen to the equilibrium position if there is a decrease in the price of milk
that is used in the production of ice cream?

[1] Both the equilibrium price and quantity will increase.

[2] The equilibrium price will increase and the equilibrium quantity will decrease.
[3] The equilibrium price will decrease and the equilibrium quantity will increase.
[4] Both the equilibrium price and quantity will decrease.

2.8 If the equilibrium price for ice cream decreases and the equilibrium quantity increases
we conclude that a possible cause of this is that

[1] the supply has decreased.

[2] the demand has increased.
[3] the supply has increased.
[4] the demand has decreased.

2.9 At the same time that a decrease in demand for ice cream occurs during the winter
time a new supplier enters the market which increases the supply of ice cream.
From these events we can predict that

[1] the equilibrium price and equilibrium quantity will definitely be higher.
[2] the equilibrium price will definitely be lower while the change in equilibrium
quantity is uncertain.
[3] the equilibrium quantity will definitely be higher while the change in equilibrium
price is uncertain.
[4] the equilibrium price will definitely be higher while the change in equilibrium
quantity is uncertain.

2.10 Given the demand for a product as Qd = 100 - 5P and the supply is given as
Qs = -20 + 3p. You are told equilibrium is obtained at the point where Qd = Qs.

The equilibrium price for the product is

[1] R5
[2] R6.67
[3] R15
[4] R20

21
2.11 Given the demand for a product as Qd = 50 - 8P and the supply is given as
Qs = -17,5 + 10P. You are told equilibrium is obtained at the point where Qd = Qs.
The equilibrium quantity for the product is

[1] 3,75
[2] 20
[3] 38,25
[4] 42

2.12 Study the following diagram and answer the question:

For every quantity between zero and 300

[1] consumers pay the price they are prepared to pay.

[2] consumers pay less than they are prepared to pay.
[3] consumers pay more than they are prepared to pay.
[4] producers receive a price lower than they are willing to supply it for.

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2.13 Study the following diagram and answer the question:

If the price decreases to R3 then

[1] the quantity supply will be more than 300 and the total producer surplus will
increase.
[2] the quantity supplied will be unchanged and the producer surplus will decline.
[3] the quantity supplied will be less than 300 and the producer surplus will be
unchanged.
[4] the quantity supplied will be less than 300 and the total producer surplus will
decrease.

2.14 If a price of a complement increases then

[1] the demand for the related good will increase.

[2] the supply of the related good will increase.
[3] the supply of the related good will decrease.
[4] the demand for the related good will decrease.

23
2.15 If tea and coffee are substitutes, given the change in the coffee market as indicated in
the diagram, what will happen on the market for tea?

Tea market

Coffee market

[1] The supply of tea will decrease and the equilibrium price of tea will increase, and
the equilibrium quantity will decrease and people will drink less tea.
[2] The demand for tea will decrease and the equilibrium price of tea as well as the
equilibrium quantity will decrease, and people will drink less tea.
[3] The supply of tea will increase and the equilibrium price of tea will decrease, and
the equilibrium quantity will increase and people will drink more tea.
[4] The demand for tea will increase and the equilibrium price of tea as well as the
equilibrium quantity will increase, and people will drink more tea.

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ASSIGNMENT 03
UNIQUE NUMBER 702580
3 April 2018
Due date:
Learning units 5.5 to 7
Content:
30% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Bernard Serfontein.

3.1 Which one of the following is an example of a price floor?

[1] During 2017, the lowest price charged for chicken was R34 per kg.
[2] During 2017, the highest price charged for maize was R2 000 per ton.
3] The legally established minimum price for sugar is R20 per kg.
[4] The legally established maximum price for university fees in 2017 was R2 500
per subject.

3.2 The following diagram represents the market for an economics course. Owing to the
pressure of students through the “Fees must fall” campaign, the government imposes
a price ceiling of R2 500 for a university subject.

25
 At a price ceiling of R2 500

[1] 18 000 students will be able and willing to do the course.

[2] an excess supply of 6 000 places exists.
[3] an excess demand of 3 000 places exists.
[4] 15 000 students will be able to enrol for the course.

3.3 A price floor creates an excess supply, and society needs to decide how to deal with
this excess supply. Which one of the following are possible ways to deal with this
excess supply?

[1] Buyers should be placed on a waiting list.

[2] A production quota system should be implemented whereby government would
limit the production of the product.
[3] The suppliers should decide who should be able to obtain the product.
[4] Government should decide who should be able to obtain the product.

3.4 Which one of the following statements with regards to price elasticity is correct?

[1] The price elasticity of demand provides us with a measure of how sensitive or
responsive the price of a good or service is to a change in demand.
[2] If you know what the price elasticity of petrol is, you will know how sensitive or
responsive the quantity demanded of petrol is to a change in the price of petrol.
[3] If you know what the price elasticity of petrol is, all you will be able to say is that
an increase in the price of petrol will reduce the quantity of petrol demanded.
[4] If the price elasticity of good X is greater than the price elasticity of good Y, it
means that households are more responsive or sensitive to a change in the price
of good Y than to a change in the price of good X.

3.5 The following diagram shows what happens if the supply of restaurant meals
decreases due to an increase in the cost of producing restaurant meals - the
equilibrium price increases and the equilibrium quantity declines. What you need to do
is to calculate the price elasticity coefficient for restaurant meals for the price range
R100 to R110.

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The price elasticity coefficient is equal to

[1] 0,3
[2] 2,5
[3] 3
[4] 6,8

Questions 3.6 and 3.8 are based on the following information which indicates the demand
for airline tickets between Johannesburg and Cape Town for business travellers and holiday
travellers.

Business travellers Holiday travellers

Price (P)
Quantity demanded Quantity demanded

1 700 1 600 1 200

3 000 1 400 600

Using the midpoint method, calculate the price elasticity for business travellers and for
holiday travellers if the price increases from R1 700 to R3 000.

3.6 The price elasticity for

[1] business travellers are elastic while for holiday travellers it is inelastic.
[2] business travellers are inelastic while for holiday travellers it is elastic.
[3] business travellers and holiday travellers are both elastic.
[4] business traveller and holiday travellers are both inelastic.

27
3.7 The price elasticity for business travellers is

[1] more inelastic compared to the price elasticity for holiday travellers.
[2] less inelastic compared to the price elasticity for holiday travellers.
[3] the same as that for holiday travellers.
[4] equal to unitary elasticity.

3.8 Which one of the following might be the reason for the difference between the price
elasticity for business travellers and the price elasticity for holiday travellers?

[1] Fewer substitutes are available for holiday travellers than for business travellers.
[2] For business travellers travelling between Johannesburg and Cape Town, airline
tickets are more of a necessity than for holiday travellers.
[3] It is easier for business travellers to change their plans than for holiday travellers

Question 3.9 is based on the following diagram for restaurant meals showing an increase in
the cost of producing restaurant meals.

3.9 Comparing the total revenue of the firm before the increase in the cost of producing a
restaurant meal with the total revenue after the increase in the cost of producing a
restaurant meal one can conclude that

[1] The total revenue of the firm is higher after the increase in the price of a
restaurant meal.
[2] Total revenue of firm is the same as before the increase in the price of a
restaurant meal.
[3] The total revenue of the firm is lower after the increase in the price of a
restaurant meal.

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3.10 Which one of the following statements is true with regards to price elasticity and total
revenue.

[1] If demand is inelastic an increase in the price will increase total revenue while a
decrease in price will decrease total revenue.
[2] If demand is inelastic an increase in price will decrease total revenue while a
decrease in price will increase total revenue.
[3] If demand is inelastic an increase in price will increase total revenue and a
decrease in price will also increase total revenue.
[4] If demand is inelastic an increase in price will decrease total revenue and a
decrease in price will also decrease total revenue.

3.11 Suppose the cross-elasticity of demand between two products, A and B, is positive. If
there is a fall in the cost of producing good B, the quantity demanded will

[1] increase for both goods.

[2] decrease for both goods.
[3] increase for good A and decrease for good B.
[4] decrease for good A and increase for good B.

3.12 The relationship between total utility and marginal utility is as follows:

[1] As total utility increases at a decreasing rate, marginal utility decreases.

[2] When total utility is at a maximum point, marginal utility is at its maximum.
[3] As total utility starts to decline, marginal utility becomes positive.
[4] As total utility increases at a decreasing rate, marginal utility increases.

3.13 A utility-maximising consumer will choose to purchase another unit of a good if

[1] the opportunity cost of consuming the good is constant.

[2] the marginal utility of the good is falling.
[3] the good has the lowest weighted marginal utility.
[4] the good has the highest weighted marginal utility.

3.14 Based on the following information on the marginal utility and price of ice cream,
chocolate, colddrink and bread:

• The marginal utility of a chocolate is 72 and the price is R3.

• The marginal utility of an ice cream is 100 and the price of an ice cream is R5.
• The marginal utility of a colddrink is 120 and the price is R10.
• The marginal utility of bread is 60 and the price is R12. 5

29
 Which one has the highest weighted marginal utility?

[1] Chocolate
[2] Ice cream
[3] Colddrink
[4] Bread

3.15 the question is based on the following data about Eric’s consumption of coffee and
tea.

Coffee Tea

MU÷P MU÷P MU÷P

Quantity MU MU
(R3) (R6) (R4)

1 30 10 5 48 12

2 24 8 4 40 10

3 18 6 3 32 8

4 12 4 2 16 4

5 6 2 1 12 3

If his income is R30 and the price of coffee is R6 and the price of tea R4 how many
cups of coffee must he buy to reach maximum satisfaction?
[1] 4
[2] 3
[3] 2
[4] 1

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ASSIGNMENT 04
UNIQUE NUMBER 874385
23 April 2018
Due date:
Learning units 8 to 10
Content:
30% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Elfreda du Toit.

4.1 Which one of the following statements is correct?

[1] The time period separating the short run from the long run is at least 3 months.
[2] The short run is a period of time during which the quantities of all inputs can be
varied, but technology is held constant.
[3] The short run is a period of time during which the quantity of at least one input is
fixed and the quantities of the other inputs can be varied.
[4] The long run is a period of time during which the quantities of all factor inputs
are fixed.

4.2 Which one of the following statements is correct?

[1] Economic profit equals total revenue minus explicit costs.

[2] A firm makes normal profit when its total revenue is equal to its total economic
costs.
[3] According to the law of diminishing returns, the AP will first start declining
followed by the TP and lastly by the MP.
[4] The marginal product curve which is S-shaped, equals zero where the total
product curve reaches its maximum.

31
Complete the following table and use the data to answer questions 4.3 to 4.5.

Output Total cost Marginal Average Average Average

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

4.3 The marginal cost of the fourth unit is

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

4.4 The average fixed cost of the fifth unit is

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

4.5 The average variable cost of the third unit is

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

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4.6 Which one of the following statements is correct?

[1] According to the law of diminishing returns, a firm can expand production in the
short run through the employment of additional fixed factors of production.
[2] According to the law of diminishing returns, a firm can only expand production in
the long run when all the factors of production are variable.
[3] The law of diminishing returns applies to the long run only.
[4] The law of diminishing returns states that as more of a variable input is
combined with one or more fixed inputs in the production process, points will
eventually be reached where first the MP, then the AP and finally the TP will start
to decline.

4.7 A firm's marginal revenue (MR)

[1] is equal to the price of its product multiplied by the quantity sold.
[2] is equal to ΔTR/ΔQ .
[3] is equal to the total revenue divided by the quantity sold.
[4] is equal to the price of the product.

4.8 Under perfect competition

[1] average revenue is always equal to the price of the product.

[2] marginal revenue is always equal to marginal cost.
[3] marginal revenue is always equal to the price of the product.
[4] average revenue is always equal to marginal revenue.

4.9 Which of the following is not a characteristic of perfect competition in the short run?

[1] All firms are price takers.

[2] All firms produce where average costs are minimised.
[3] The equilibrium level of output occurs where marginal cost equals marginal
revenue.
[4] All buyers and sellers have perfect knowledge of market conditions.

33
Questions 4.10 and 4.11 refer to the figure below which shows the price, marginal cost and
average cost curves facing a perfectly competitive firm.

4.10 What is the firm's profit-maximising daily output?

[1] 60 units
[2] 80 units
[3] 100 units
[4] No output will be produced

4.11 What is the total daily revenue of the profit-maximising firm?

[1] R720
[2] R800
[3] R960
[4] R2 000

4.12 Which one of the following statements is incorrect?

Under perfect competition

[1] firms may earn economic profits in the short run.

[2] firms may earn normal profit in the short run.
[3] firms may suffer economic losses in the short run.
[4] firms may earn economic profit in the long run.

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4.13 Which one of the following statements is correct?

[1] Labour markets differ from goods markets in that labour is usually sold rather
than rented.
[2] Equilibrium (maximum profit) for an individual firm in a perfectly competitive
labour market is achieved when MRP = wage rate (w).
[3] A requirement for a perfectly competitive labour market is that employers or
workers should be influenced by government intervention.
[4] Another requirement for a perfectly competitive labour market is that labour
should be completely mobile and heterogeneous.

4.14 Which one of the following statements is correct?

[1] The derived demand curve for labour is given by the downward sloping marginal
physical product.
[2] A trade union that represents organised workers in a particular market acts as a
monopolistic supplier of labour.
[3] The market demand for labour will not change should there be a change in the
price of the product.
[4] In a perfectly competitive labour market all participants should be wage makers
or wage setters (i.e. they should determine the wage rate).

4.15 A minimum wage in a perfectly competitive labour market

[1] will normally be imposed below the equilibrium wage.

[2] which is imposed above the equilibrium wage, will lead to an excess demand of
labour.
[3] which is set above the equilibrium wage, will lead to unemployment.
[4] can be instituted in an attempt to exploit low-wage workers and to depress their
living standards even further.

35
8.2 SECOND SEMESTER ASSIGNMENTS

ASSIGNMENT 01
UNIQUE NUMBER 823799
6 Augustus 2018
Due date:
Learning units 1 to 3
Content:
10% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Willie le Roux.

1.1 Economics is

[1] a study of the ethics of making money.

[2] the study of how scarce resources are allocated in an attempt to satisfy unlimited
wants.
[3] the study of direct and indirect relationships between inputs and outputs in
various production methods.
[4] a sub discipline of business management.

1.2 Scarcity requires households to

[1] cooperate.
[2] compete.
[3] trade.
[4] make choices.

Questions 1.3 to 1.5 are based on the following diagram.

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 ECS1501/101

1.3 At what point is the economy experiencing a high rate of unemployment?

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

1.4 If the economy is at point B and wishes to increase its output of food, it must

[1] put unemployed resources to work.

[2] also increase the production of clothing.
[3] reduce the output of clothing.
[4] move the economy to point D.

1.5 Celia is a potato peeler for CanCan Foods. She decides to quit her job and instead
work as a seamstress at CoverUp Clothing. This would cause

[1] an outward shift of the production possibilities curve.

[2] an inward shift of the production possibilities curve.
[3] a movement towards point D.
[4] a movement along the production possibilities curve.

1.6 Which one of the following must be held constant when drawing a production
possibilities curve?

[1] the total resources available

[2] the allocation of resources between alternative uses
[3] the buying power of consumers
[4] the unemployment rate

1.7 A macroeconomist might be concerned with the effect of

[1] big companies colluding to exploit the consumer.

[2] taxation on unemployment rates.
[3] agricultural wage levels on the price of wheat.
[4] the oil price on motor vehicles sales.

1.8 How are resources allocated in most societies?

[1] by decree of a central planner or the government

[2] through the combined actions of numerous households and firms
[3] based on the policy directives issued by central banks
[4] by a relatively few large corporations

37
1.9 How does Adam Smith’s “invisible hand” direct economic activity?

[1] through subconscious messages

[2] through mass media advertising
[3] through social media pages
[4] through prices

1.10 The major flows in the economy are

[1] total production, net exports and personal income.

[2] net national income, net national product and savings.
[3] total production, total income and total spending.
[4] investment, capital stock and imports.

1.11 When considering the following economic variables, we can say

[1] capital, wealth and natural resources are stock variables, whereas investment,
profit and loss are flows.
[2] capital, wealth and income are stock variables, whereas investment and profit
are flows.
[3] investment, income and profit are stock variables, whereas capital, wealth and
natural resources are flows.
[4] saving is a stock variable, but investment is a flow.

1.12 In the circular flow model, ________ represent a real flow.

[1] wages paid to labour

[2] household savings
[3] goods consumed by households
[4] taxes collected by government

1.13 Thembi works in a chocolate factory. Overtime worked by her is considered ________
and she earns ________.

[1] entrepreneurship; profit

[2] labour; wages
[3] labour; profit
[4] human capital; interest

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1.14 How would an economist view a commercial forest that provides raw material inputs
for a wood pulp mill?

[1] as part of the factors of production, natural resources

[2] as part of the capital stock of the economy
[3] as the unproductive use of land and therefore not a factor of production
[4] as an unproductive asset, since it may take several years before the forest is
ready for harvesting

1.15 When Herman got hired as a gardener, he bought a six-pack of beer to celebrate. He
is therefore

[1] a buyer in the market for goods and a seller in the market for factors of
production.
[2] a seller in the market for goods and a buyer in the market for factors of
production.
[3] a buyer in the market for goods and a buyer in the market for factors of
production.
[4] a seller in the market for goods and a seller in the market for factors of
production.

As part of our drive to improve our service, we need to get a clearer picture of our student
profiles. To help us in this, please answer the following questions (1.16 to 1.20):

1.16 Did you have mathematics in high school?

[1] Yes, and I got more than 60%

[2] Yes and I passed
[3] Yes but I did not pass
[4] I only had Mathematical literacy
[5] No.

1.17 What is your home language?

[1] Zulu
[2] Sepedi
[3] Afrikaans
[4] English
[5] Other

39
1.18 Which of the following best descripts your internet access?

[1] I have unlimited Internet access on a computer or laptop.

[2] I have limited internet access on a computer or laptop.
[3] I only have internet access on my smartphone.
[4] I do not have any access to the internet.

1.19 Which of the following is true about you?

[1] I am a full time student.

[2] I am a part time student.

1.20 I would rather join module related discussion on Facebook than on the myUnisa
discussion forum.

[1] Agree.
[2] Disagree.

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ASSIGNMENT 02
UNIQUE NUMBER 774772
27 Augustus 2018
Due date:
Learning units 4 to 5.4
Content:
30% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Elfreda du Toit.

2.1 Demand is the quantity of goods

[1] desired by consumers.

[2] ordered by consumers in a particular period.
[3] consumers are willing and able to buy at particular prices in a certain period.
[4] that consumers require in order to survive.

2.2 Which of the following will not cause a change in the demand for coffee (illustrated by
a shift of the demand curve)?

[1] An increase in the price of coffee.

[2] A decrease in the price of milk, a complement.
[3] An increase in the number of people drinking coffee.
[4] An increase in the income of households.

2.3. How can the impact of an increase in the price of petrol on the demand curve for
petrol be illustrated?

[1] The demand curve for petrol will shift to the left.
[2] The demand curve for petrol will shift to the right.
[3] The demand curve for petrol will remain unchanged.
[4] The demand curve will become more elastic.

2.4 If there is a technological breakthrough in the beer manufacturing process then,

[1] the supply of beer will increase.

[2] the supply of beer will decrease.
[3] the demand for beer will increase.
[4] there will be no effect on the supply or demand of beer.

41
2.5 Which one of the following statements is incorrect?

[1] An increase in supply is illustrated by a rightward shift of the supply curve.

[2] An increase in the quantity supplied is illustrated by an upward movement along
the supply curve.
[3] There is a positive relationship between the price of a product and the quantity
supplied.
[4] A decrease in supply is illustrated by a downward movement along the supply
curve.

2.6 If there is an increase in the price of red meat, a substitute in production for milk,
then

[1] the supply of milk will increase.

[2] the supply of milk will decrease.
[3] the demand for milk will decrease.
[4] there will be a movement along the supply curve for milk.

2.7 The diagram below shows the market for hamburgers.

If the price of hamburgers is fixed at R35 per burger, then

[1] there will be a surplus of 80 hamburgers.

[2] there will be a shortage of 50 hamburgers.
[3] the quantity of hamburgers supplied will fall to zero.
[4] there will be a shortage of 80 hamburgers.

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2.8 Consumer surplus indicates that

[1] it is impossible to increase consumer wellbeing by changing the way in which
income is spent.
[2] consumers often get more value from a good than is represented by the price.
[3] the allocation of resources is decided by the interaction of buyers and sellers.
[4] market equilibrium can always be attained.

2.9 The producer surplus is

[1] always greater than the consumer surplus.

[2] the difference between producers’ revenue and their cost of production.
[3] the difference between the price that producers receive and the lowest prices at
which they are willing to supply the different quantities.
[4] what producers have left after all their expenses have been paid.

2.10 If the equation for a market demand curve is Qd = 100 – 0,5P and the equation for a
market supply curve is Qs = –20 + P, the market equilibrium price and quantity are:

[1] P = 0,5; Q = -20

[2] P = 0,5; Q = 80
[3] P = 80; Q = 60
[4] P = 60; Q = 100

2.11 Use the diagram below to answer the question.

43
 The diagram depicts a decrease in the demand for pies on a campus. If at the same
time there was a rent increase for food outlets on campus, then in comparison with
the original equilibrium E0, there would be

[1] an increase in equilibrium price and quantity.

[2] an increase in equilibrium quantity but a decrease in price.
[3] a decrease in equilibrium quantity but an increase in price.
[4] a decrease in equilibrium quantity but an indeterminate effect on price.

2.12 Use the diagram below to answer the question.

The decrease in supply curve from S to S1 can be the result of:

[1] an increase in the price of the factors of production.

[2] an improvement in productivity.
[3] a decrease in the price of all inputs in the production process.
[4] an increase in the price of the product itself.

2.13 Which one of the following statements is incorrect?

[1] An increase in supply tends to result in a lower price.

[2] A simultaneous increase in demand and supply has an uncertain impact on price.
[3] The impact of a simultaneous decrease in demand and supply on the equilibrium
quantity is impossible to predict.
[4] A simultaneous increase in demand and supply tends to result in a higher
equilibrium quantity in the market.

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2.14 Suppose A and B are substitutes. Which one of the following statements is incorrect?

[1] An increase in the price of A will lead to an increase in the demand for B.
[2] An increase in the price of B will result in an increase in the demand for A.
[3] An increase in the price of A will lead to a rightward shift of the demand for B.
[4] An increase in the price of A will lead to a leftward shift of the demand for A.

2.15 Suppose C and D are complements. Which one of the following statements is
incorrect?

[1] An increase in the price of C can be illustrated by a shift of the demand curve for
C.
[2] An increase in the price of C will result in a decrease in the quantity demanded of
C and will therefore also lead to a reduction in the demand for D.
[3] A decrease in the price of C will result in an increase in the quantity demanded of
C and will therefore also lead to an increase in the demand for D.
[4] An increase in the price of C can lead to a shift of the demand curve for D to the
left.

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 ASSIGNMENT 03
UNIQUE NUMBER 788543
10 September 2018
Due date:
Learning units 5.5 to 7
Content:
30% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Bernard Serfontein.

3.1 When a price ceiling is imposed in a market

[1] a persistent shortage is created.

[2] a persistent surplus is created.
[3] sellers of the product are made better off.
[4] quantity supplied is greater than the quantity demanded.

3.2 The following diagram represents the market for tomatoes. Owing to the pressure of
tomato farmers, the government imposes a price floor of R25 per kg on tomatoes.

At a price floor R25 per kg

[1] households are willing and able to purchase 20 000 kg of tomatoes.

[2] an excess demand of 10 000 kg exists.
[3] the quantity of tomatoes offered for sale will be the same as the quantity
purchased.
[4] the quantity of tomatoes offered for sale will be more than the quantity
purchased.

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3.3 In order for a price floor to be effective, it must be set ________ the equilibrium
price, while a price ceiling must be set ________ the equilibrium price in order to be
effective.

[1] above; below

[2] above; above
[3] below; above
[4] below; below

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 If the price elasticity of beef is greater than the price elasticity of coffee, it means that
households are

[1] more responsive or sensitive to a change in the price of beef than to a change in
the price of coffee.
[2] more responsive or sensitive to a change in the price of coffee than to a change
in the price of beef.
[3] more responsive or sensitive to a change in the demand for coffee than to a
change in the demand for beef.
[4] more responsive or sensitive to a change in the demand for beef than to a
change in the demand for coffee.

3.6 You are given the following information about the demand for fresh tomatoes.

Price per kg Quantity demanded (kg)

R30 1 000

R32 850

Using the midpoint method calculate the price elasticity of demand (using 2 decimal
places) for the R30 to R32 price range. The price elasticity of demand for tomatoes is

[1] 0,26
[2] 1,00
[3] 2,25
[4] 2,51

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3.7 If the price elasticity of medical care is 0,31 it can be concluded that the demand for
medical care is ________ since the percentage change in quantity demanded is
________ the percentage in price.

[1] price inelastic; less

[2] price inelastic; greater
[3] price elastic; less
[4] price elastic; greater

3.8 What kind of price elasticity is indicated in the following diagram?

[1] Relatively elastic demand

[2] Unitary elastic demand
[3] Relatively inelastic demand
[4] Perfectly elastic demand

3.9 A possible reason that the demand for petrol is inelastic is because

[1] households spend a small proportion of their income on petrol.

[2] petrol is a luxury good.
[3] there is no close substitute for petrol.

3.10 Given that tomatoes has a price elastic demand the total revenue of tomato firms will

[1] increase if the price rises.

[2] decrease if the price rises.
[3] increase if the price fall.
[4] stay the same if the price rises.

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3.11 If a 10% increase in income causes a 20% increase in the quantity demanded for a
good or service. It can be concluded that

[1] the price elasticity of the good or service is greater than one.
[2] the income elasticity of the demand for the good or service is negative.
[3] the good or service is a necessity.
[4] the good or service is a luxury good.

3.12 Utility is best defined as

[1] 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 diagram of the total utility of the consumption of
beer by Peter.

As the units of beer consumed by Peter increases from 1 unit to 7 units his total utility
________ and his marginal utility ________ .

[1] increases; increases

[2] decreases; decreases
[3] increases; decreases
[4] decreases; increases

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3.14 Given the price of goods and services, which of the following indicates consumer
equilibrium?

[1] The consumer spends his or her income in such a way that he or she attains the
highest possible marginal utility.
[2] The consumer spends his or her income in such a way that the weighted
marginal utility (marginal utility per rand) is the same for the goods.
[3] The consumer spends his or her income in such a way that he or she attains the
lowest possible total utility.
[4] The consumer spends his or her income in such a way that the weighted
marginal utility (marginal utility per rand) is at its lowest.

3.15 If you have R20 to spend on chicken pieces and pies how many chicken pieces will
you consider buying to reach maximum satisfaction f the price is R4 per chicken piece
and R4 for a pie?

Chicken pieces Pies

MU÷P MU÷P MU÷P

Quantity MU MU
(R4) (R2) (R4)

1 32 8 16 48 12

2 24 6 12 40 10

3 16 4 8 32 8

4 12 3 6 16 4

5 8 2 4 12 3

[1] 1
[2] 2
[3] 3
[4] 4
[5] 5

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 ECS1501/101

ASSIGNMENT 04
UNIQUE NUMBER 626296
1 October 2018
Due date:
Learning units 8 to 10
Content:
30% of your semester mark
Weight:
Via myUnisa or on a mark-reading
Submit:
sheet
This assignment was compiled by Kafayat Amusa.

4.1 In economics, "the long run" is referred to as

[1] a period in which the amounts of labour are fixed.

[2] a period in which the amounts of capital are variable.
[3] a period in which the amounts of all factors of production can be changed.
[4] a period in which the amounts of all factors of production are fixed.

4.2 With regard to production, which of the following statements correctly explains
diminishing returns?

[1] The marginal product of a factor is falling and negative.

[2] The marginal product of a factor is positive but falling.
[3] The marginal product of a factor is positive and rising.
[4] The marginal product of a factor is constant.

4.3 The law of diminishing marginal returns refers to the situation in which _______
eventually declines as more of the variable input is employed, given a certain amount
of the fixed input.

[1] average revenue

[2] marginal product
[3] average cost
[4] marginal cost

4.4 If the average fixed cost and average variable cost for producing 6 units of shoes are
R64 and R16, respectively, what is the total cost at this level of output?

[1] R10,66
[2] R80
[3] R480
[4] R1 040

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Use the table below to answer questions 4.5 and 4.6 that follow.

Q AFC AVC AC TFC TVC TC

1 50 110 60
2 25 95 190 240
3 16,67 146,67 440,01
4 156 170 630

4.5 What is the TFC at each level of output?

[1] 10
[2] 25
[3] 50
[4] 60

4.6 What is the AVC for the third level of output?

[1] 61
[2] 130
[3] 160
[4] 300

4.7 What will happen if a shoe firm sells its shoes at a price lower than the opportunity
cost of the inputs used in the production process?

[1] The firm will make both accounting and economic profits.
[2] The firm will make both accounting and economic losses.
[3] The firm will possibly make an economic profit and an accounting loss.
[4] The firm will possibly make an accounting profit but will make an economic loss.

4.8 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.

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4.9 A profit-maximising firm sells its product for R300, but continues to produce even
though it is making a loss. This suggests that

[1] the marginal cost is less than the price.

[2] the average fixed cost is less than the price.
[3] the average variable cost is less than the price.
[4] the average total cost is less than the price.

4.10 A perfectly competitive firm is described as a market with

[1] a few firms producing differentiated goods.

[2] a few buyers, many sellers and the production of differentiated goods.
[3] many buyers, many sellers and the production of homogenous goods.
[4] a large number of firms that each individually sets the price of their goods.

4.11 The determination of the price of a product in a perfectly competitive market is where
the

[1] supply and demand curves intersect.

[2] quantity supplied and quantity demanded intersect.
[3] marginal cost equals the price of the product.
[4] marginal revenue equals the marginal cost.

4.12 At what price should a firm produce to maximise profits in a perfectly competitive
market?

[1] where price equals marginal cost

[2] where price equals marginal revenue
[3] where price equals total revenue
[4] where price equals average revenue

4.13 When a perfectly competitive industry is in a long-run equilibrium, all the firms in the
industry will

[1] earn an economic profit.

[2] make an economic loss.
[3] earn a normal profit.
[4] earn zero profits.

4.14 Which of the following correctly characterises a perfectly competitive labour market?

[1] a large number of firms and a large number of workers

[2] imperfect information
[3] employees and employers having individual control over the market wage rate
[4] very few skilled workers

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4.15 Which of the following is true of the profit-maximising level of employment in a
perfectly competitive labour market?

[1] The marginal revenue product equals the value of marginal product.
[2] The marginal revenue product equals the marginal cost of labour.
[3] The marginal product equals the marginal revenue product.
[4] The marginal product equals the marginal cost of labour.

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