1. (
t
)Programme: SAIM Diploma in
Business Management FRONT PAGE
COLLEGE
SA
Subject: Economics A -
Microeconomics
ASSIGNMENT 1
Your Name: F'tfJ-,<Jf:; f<o..ad1
Student Number: J[o£.q
ID Number:
Declaration
I declare that this Assignment is entirely my own work.
2. Signature
Checklist
I have written neatly and clearly.
I have stapled all the pages together. I have numbered all the
pages.
I have made a copy of my assignment. My account is up to date.
Total pages faxed (including this page)
My Result: Tutor
Comments:
Date
D D
D D D
D
SAIM Diploma: Economics A- Micro Economics & Economics
4. 74/150
=
49
%
)
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
5. 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
(
A
ss
i
g
n
m
e
nt
9. 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
10. 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:20120903231733+02'00'2012/09/03
11:17:33
PM
--------------------------------------------
equilibrium
qtty
is
20
you
havent
included
it
Q2
=
11. 15/25
)
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)
12. 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:20120903231950+02'00'2012/09/03
11:19:50
PM
--------------------------------------------
the
question
says
with
the
help
of
graphs,
14. 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
15. 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
10%
9%
8%
7%
6%
5%
4%
16. 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
17. 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
Steel Price in USD
1200
19. 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%
(
G
D
P
%
)3%
2%
1%
0%
2009
US and Japan GDP Grow th Rates
(
user
D:20120903232345+02'00'2012/09/03
22. 6.1. 2 Short-term equilibrium
6.1 .3 Physical needs
(
user
D:20120903232454+02'00'2012/09/03
11:24:54
PM
--------------------------------------------
Q6
=
10/18
where
is
6.2
and
6.3
)
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
23. 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
24. 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:20120903232659+02'00'2012/09/03
11:26:59
PM
--------------------------------------------
I
am
meant
to
believe
you
omitted
the
27. 3/15
)
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)
28. 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)
1
QUESTION 1
29. 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
30. 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 %
31. 2
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
32. 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
33. 3
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)
34. 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
4
3. Relatively inelastic demand: the change in quantity demanded
is less than the
change in the price.
35. 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-
36. 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
38. 3%
2%
1%
0%
Jan Feb Mar Apr May Jun
South African Output decreasing from 9% to 4.5% over the six
month period.
39. 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
40. similar prices for steel than their international competitors
6
G
D
P
%
S
te
e
l
P
ri
c
e
i
n
41. 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
42. 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
43. 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
7
6.1.4 Perfect compet itive market
6.1.5 Marginal utility
6.1 . 6 Income elasticity
6.1 .7 Public sector
44. 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
45. 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
8
Ans.
At 40000 units of Capital Goods= 350000 Units of Consumer
Goods were produced
46. 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
47. 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
48. I do not see the answers to 8.2 & 8.3
9
P24P25P26P27P28P29P30P31
49. P34P35P36P37P38P39P40P41P42
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
50. 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
51. 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
52. 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
53. 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%
