DEPARTMENT OF ECONOMICS

Transcription

1 ECS101-6/101/3/2005 DEPARTMENT OF ECONOMICS Economics I (ECS101-6) Tutorial Letter 101/2005 (First and second semester) CONTENTS (See inside)

2 2 CONTENTS Welcome... 3 Prescribed textbook and study material... 4 Communication with the university... 5 Communication with lecturers... 5 Discussion classes... 6 Study groups... 6 Study approach... 6 Assessment system... 7 Examination admission... 9 The format of the examination paper... 9 Proposed study program: First semester Proposed study program: Second semester Submission of assignments Extension for submitting assignments Assignments - closing dates Assignments: First semester Assignment Assignment Assignment Assignment Assignments: Second semester Assignment Assignment Assignment Assignment

3 3 ECS101-6/101 WELCOME Dear Student Welcome to Economics 1A! The code for this module is ECS We hope that you find this module interesting, mentally stimulating and rewarding. Read this tutorial letter thoroughly, plan your studies (see the suggested study programme in this tutorial letter) and begin work immediately. Since there are only 15 weeks from the last day of registration to the start of the examination it is imperative that you get off to an early start. TO BE ADMITTED TO THE EXAMINATION YOU MUST SUBMIT AT LEAST ASSIGNMENT 01 OR ASSIGNMENT 02 BEFORE THE DUE DATE. YOUR SEMESTER MARK AND EXAMINATION MARK WILL CONTRIBUTE TO YOUR EXAMINATION MARK. THE SEMESTER MARK IS BASED ON THE MARKS AWARDED FOR THE ASSIGNMENTS.

4 4 PRESCRIBED TEXTBOOK AND STUDY MATERIAL Prescribed material The prescribed material for this module consists of one textbook, one study guide and all tutorial letters you will receive during the course of the semester. The particulars are as follows: Textbook Philip Mohr, Louis Fourie and associates Economics (for South African students). Third edition. Pretoria: Van Schaik. Please do not buy the second edition! Only the third edition is prescribed. This book can be obtained from the official booksellers. Please consult the list of official booksellers and their addresses in the booklet entitled Unisa: services and procedures (which you received with your tutorial matter). If you have any difficulties with obtaining books from these bookshops, please contact the Registrar (Academic) as soon as possible at telephone number (012) Study Guide You should have received a study guide for this module at registration. Tutorial letters Please read this tutorial letter (TL 101) carefully before starting your studies in ECS For this module you will receive a number of tutorial letters during the course of the semester from the Department of Despatch (TL 102, 201, 301). Note: Some of this tutorial matter may not necessarily be available when you register. It will be posted to you during the course of the semester. Inventory letter When you registered, you should have received an inventory letter containing information about your tutorial matter. See also the booklet entitled Unisa: services and procedures. It is your responsibility to make sure that you receive all the tutorial matter from Unisa. The study material for Economics 1A (ECS101-6) is also available on the Internet at no extra cost. Students who would like to make use of this site and participate must first register with Students Online (SOL). For more information please consult the booklet Unisa: services and procedures.

5 5 ECS101-6/101 COMMUNICATION WITH THE UNIVERSITY For all administrative matters and contact numbers please consult the booklet Unisa services and procedures as well as Tutorial letter 301/2005. Listed below are the telephone numbers and addresses of the administrative departments at Unisa that deal with most student queries. # For queries dealing with registration matters, applications, change of addresses, course exemptions, costs, etc we refer you to the Department of Undergraduate Student Affairs, telephone number (012) or address undergrad@unisa.ac.za # For queries dealing with study material and tutorial letters not received we refer you to the Department of Despatch, telephone number (012) or address despatch@unisa.ac.za # For all queries regarding assignments we refer you to the Assignment Section, telephone number (012) or address assign@unisa.ac.za # Direct all exam queries such as dates, results, etc to the Department of Examinations, telephone number (012) or address exams@unisa.ac.za # Queries relating to the availability of the prescribed textbook or difficulties with obtaining it from the official booksellers, should be directed to the Registrar (Academic), telephone number (012) Note: Always have your student number at hand when you call the University. COMMUNICATION WITH LECTURERS For your convenience a designated telephone number is reserved for ECS101-6: (012) A routing facility will ensure that you are automatically connected to the first available lecturer. This may take a while. Please do not hang up if you do not receive an immediate reply. Mr M Lucouw (the administrative coordinator) can also be contacted at (012) communication with lecturers can be established via SOL. Consult the booklet Unisa: services and procedures. Letters to lecturers should be addressed to: The Head Department of Economics PO Box 392 UNISA 0003

6 6 DISCUSSION CLASSES In the first semester and the second semester a number of discussion classes will be held in the major centres (Pretoria, Polokwane, Durban and Cape Town). The relevant dates and venues will be set out in Tutorial Letter 301/2005. STUDY GROUPS Students are encouraged to form study groups. The addresses of other students in your neighbourhood may be obtained from the University. Please write to: The Registrar (Academic) PO Box 392 UNISA 0003 or telephone number (012) or condiscipuli@unisa.ac.za STUDY APPROACH The study guide is the most important learning aid at your disposal. Consult your study guide before you start working through the textbook. Chapters and subsections that are prescribed for examination purposes are set out in detail in the study guide. Guidelines for studying the prescribed work are also explained in the study guide. Four assignments per semester are included in this tutorial letter. Although examination admission is obtained by submitting at least one of the two compulsory assignments, you can obtain a good semester mark through the assignments. We would strongly advise you to do all four assignments. From past experience we know that a strong correlation exists between the number of assignments passed and the final mark.

7 7 ECS101-6/101 ASSESSMENT SYSTEM An integrated assessment system is used for this module. This means that your final mark is based not only on your examination mark, but also on your performance during the semester. Assignments are not only used to give you an opportunity to evaluate your understanding of the prescribed material, or to give you feedback on your readiness for the examinations, but they are also used in the calculation of a semester mark. Your final mark will be calculated as follows: Semester mark 10% + Examination mark 90%. A final mark of 50% is required in order to pass this module. Semester mark Your semester mark is based on your assignment marks. During the semester you have four assignments which count towards your semester mark. Different weights are allocated to the assignments. The first assignment counts 10%, while the second, third and the fourth each counts 30% of your semester mark. Obviously, if an assignment is not submitted or submitted late (for whatever reason), no marks can be awarded, for example: Assignment Mark achieved Percentage x weight not submitted or submitted after the due date ,7 x 0,1 4,2% 83,3 x 0,3 25% 0 x 0, x 0,3 22,5% Semester mark 51,7%

8 8 The examination mark The percentage achieved in the examination is used in the calculation of your final mark. Final mark As stated previously the final mark is calculated as follows: Semester mark 10% + Examination mark 90%. For example: Suppose your semester mark is 51,7% and you get 54% in the examination. Your final mark will be (51,7 x 10%) + (54 x 90%) = (51,7 x 0,1) + (54 x 0,9) = 5,2 + 48,6 = 53,8% Keep in mind that though admission to the examination can be obtained by submitting either assignment 01 or assignment 02, it is to your advantage to prepare and submit all the assignments in time. K If your final mark (as calculated in the method above) is 50%, you pass ECS K If your final mark (as calculated in the method above) is less than 50%, but between 45% and 49%, you do not pass ECS101-6 but qualify for a supplementary examination. K If your final mark (as calculated in the method above) is less than 45%, you fail ECS101-6 and you have to reregister for ECS101-6.

9 9 ECS101-6/101 EXAMINATION ADMISSION For students to fully benefit from our formative tuition and assessment the Management of the University decided to introduce compulsory assignments in all modules for You are therefore required to submit a compulsory assignment to obtain admission to the examination. For this module you can submit either Assignment 01 or Assignment 02 for examination admission purposes. Please ensure that your compulsory assignment reaches the University before the due date ) late submission will result in you not being admitted to the examination. Although examination admission can be obtained by submitting either Assignment 01 or Assignment 02, we would strongly advise you to do all four assignments in time as they count towards your final mark. Furthermore, experience has shown that a strong correlation exists between the number of assignments submitted (and passed) and the final mark. THE FORMAT OF THE EXAMINATION PAPER You will receive a partial fill-in examination paper plus a mark-reading sheet. This implies that you must complete the first section of the exam on the examination paper. The second section of the paper must be completed on the mark-reading sheet. The examination paper plus the mark-reading sheet are handed to the invigilator. Pocket calculators are not permitted in the examination room! The 2-hour examination paper of 100 marks will consist of two sections: Section A and Section B. Section A All the questions in this section must be answered. Section A consists of definitions and short questions in which you are generally asked to name or list a number of factors/determinants/categories, distinguish between two concepts or explain an economic concept (possibly with the aid of a diagram). There will also be at least one longer question. Section A carries a total of 40 marks (out of a grand total of 100 marks). Section B Section B consists of 20 multiple-choice questions of which all must be answered on the markreading sheet which will be provided. Each question will be worth 3 marks, so that Section B will carry a total of 60 (ie 20 multiplied by 3) marks. Note that we do not mark negatively. PASS REQUIREMENT : A final mark (semester mark + examination mark), as explained under the Section: Assessment system, of 50% is required. TAKE NOTE: If you have failed ECS101-6 in a specific semester you may register for both modules (ECS101-6 and ECS102-8) in the next semester!

10 10 PROPOSED STUDY PROGRAM First semester Try to adhere to this study program as far as possible. WEEK WEEK COMMENCING ACTIVITY 1 31 January Study chapter 1 (study unit 1) and answer the questions at the end of each section. 2 7 February Study chapter 2 (study unit 2) and answer the questions at the end of each section February Study chapter 3 (study unit 3) and answer the questions at the end of each section February Study chapter 7 (study unit 4) and answer the questions at the end of each section February Study chapter 8 (study unit 5) and answer the questions at the end of each section. 6 7 March Study chapter 9 (study unit 6) and answer the questions at the end of each section March Study chapter 10 (study unit 7) and answer the questions at the end of each section March Study chapter 11 (study unit 8) and answer the questions at the end of each section March Study chapter 12 (study unit 9) and answer the questions at the end of each section April Study study unit 10 of the Study Guide and chapter 14 (study unit 11) and answer the questions at the end of each section April Revise study units 1, 2, 3 and April Revise study units 5, 6, 7 and April Revise study units 9, 10 and May Work through the mock exam paper (and answers) provided in Tutorial Letter 102. IMPORTANT: Please work through the paper so that you can see whether or not you measure up to the standard expected from you in the examination!

11 11 ECS101-6/101 PROPOSED STUDY PROGRAM Second semester Try to adhere to this study program as far as possible. WEEK WEEK COMMENCING ACTIVITY 1 4 July Study chapter 1 (study unit 1) and answer the questions at the end of each section July Study chapter 2 (study unit 2) and answer the questions at the end of each section July Study chapter 3 (study unit 3) and answer the questions at the end of each section July Study chapter 7 (study unit 4) and answer the questions at the end of each section. 5 1 August Study chapter 8 (study unit 5) and answer the questions at the end of each section. 6 8 August Study chapter 9 (study unit 6) and answer the questions at the end of each section August Study chapter 10 (study unit 7) and answer the questions at the end of each section August Study chapter 11 (study unit 8) and answer the questions at the end of each section August Study chapter 12 (study unit 9) and answer the questions at the end of each section September Study study unit 10 of the Study Guide and chapter 14 (study unit 11) and answer the questions at the end of each section September Revise study units 1, 2, 3 and September Revise study units 5, 6, 7 and September Revise study units 9, 10 and October Work through the mock exam paper (and answers) provided in Tutorial Letter 102. IMPORTANT: Please work through the paper so that you can see whether or not you measure up to the standard expected from you in the examination!

12 12 SUBMISSION OF ASSIGNMENTS For detailed information and requirements as far as assignments are concerned, consult the booklet Unisa: services and procedures, which you received with your tutorial matter. Clear guidelines on how to complete a mark-reading sheet are also given. You are welcome to submit your multiple-choice assignments through Students Online (SOL) via the Internet instead of using a mark-reading sheet. Before you will be able to use the functions on SOL, you must register as a SOL user. Only students who are registered for the current academic year may use SOL. To submit an assignment via SOL: Go to Students Online Log in with your student number and password Select the course Click on assignments Click on submit assignment Follow the instructions Unfortunately, it is not possible for the University to receive and process assignments that are transmitted by means of facsimile or . No assignments submitted by facsimile or will be marked. EXTENSION FOR SUBMITTING ASSIGNMENTS NO EXTENSIONS for submission of assignments will be considered. The Economics Department has more than ECS101-6 students and all the assignments are all marked at the same time by the computer. Late registration, late receipt of study material, illness or operations, pressure of work, accidents, disasters, labour strikes by personnel of the Post Office or any other unforeseen occurrence are NOT valid reasons for extension. All the submission dates are included in this tutorial letter. You should be able to arrange your study programme so that you can send in as many as possible of the assignments by the due date.

13 13 ECS101-6/101 ASSIGNMENTS - CLOSING DATES FIRST SEMESTER There are four multiple-choice assignments for the first semester. All four assignments are included in this tutorial letter. The details are as follows: Assignment number Unique number Closing date 2005 Content of assignment February Study Units 1, 2, March Study Units 4, March Study Units 6, 7, April Study Units 9, 10, 11 The first semester students will receive a Tutorial Letter 201 during April 2005 explaining the answers to the various assignments. NOTE: Students registered for the first semester will not receive any answers for the four assignments set for the second semester! SECOND SEMESTER There are four multiple-choice assignments for the second semester. All four assignments are included in this tutorial letter. The details are as follows: Assignment number Unique number Closing date 2005 Content of assignment August Study Units 1, 2, August Study Units 4, August Study Units 6, 7, September Study Units 9, 10, 11 The second semester students will receive a Tutorial Letter 201 during September 2005 explaining the answers to the various assignments.

14 14 ASSIGNMENTS FIRST SEMESTER ASSIGNMENT 01 Unique Number: Closing Date: 28 February 2005 Content: Study Units 1, 2 and 3 of the Study Guide Questions: 12 questions Weight: 10% of the semester mark Answer this assignment on a mark-reading sheet. Place the completed mark-reading sheet in an official assignment envelope and post it to Unisa. You are welcome to submit this assignment through SOL. If this assignment cannot be submitted on the due date or is received after the closing date for whatever reason, it will be sent back to you unmarked and will not contribute to your EXAMINATION ADMISSION and semester mark! It is your responsibility to make sure that Unisa received your assignment in time. If you have not received your assignment results within two weeks of the closing date, please contact the Assignment Section at (012) or address assign@unisa.ac.za Assignment results will also be available on SOL 2 weeks after the closing date. The solutions to this assignment will be mailed to you during April Please work through these solutions. Questions 1.1 and 1.2 are based on information in this tutorial letter: 1.1 Which of the following statements is/are correct? a. To be admitted to the examination you must submit assignment 01 or 02 in time. b. If you do not submit assignment 01 or 02 but you submit assignment 03 or 04 in time, you cannot be admitted to the examination. c. If you are admitted to the examination, all four assignments will contribute to your semester mark. [2] Only a and b [3] Only b and c [4] Only a 1.2 Which of the following statements is/are correct? a. Suppose you get 50% for assignment 01, 70% for assignment 02, 35% for assignment 03 and you do not submit assignment 04, your semester mark will be 51,7%. b. Suppose your semester mark is 88% and your examination mark is 46%. You will pass ECS101-6 because your final mark is 50,2%. c. Suppose your semester mark is 20% and your examination mark is 52%. You will pass ECS101-6 because you have more than 50% in the examination.

15 15 ECS101-6/101 [1] a and b [2] b and c [3] Only a [4] Only b 1.3 Economics involves a. Scarcity, choice and opportunity cost. b. The study of rocks. c. The study of how human beings satisfy their unlimited wants with limited resources. [1] Only a [2] Only b [3] Only c [4] a and c [5] b and c 1.4 Which one of the following statements is correct? [1] Rich people do not experience scarcity. [2] Opportunity cost is the cost to produce goods and services. [3] Resources are limited and therefore we have to make choices all the time. [4] People in rich nations are not subject to the principle of opportunity cost. [5] Scarcity and choice are unrelated concepts. 1.5 Which of the following statements is/are correct? a. Next week it will rain. This is an example of a positive statement. b. A normative statement is objective and is based on facts. c. Ceteris paribus means that all other factors remain constant. [1] a and b [2] a and c [3] Only a [4] Only b [5] Only c 1.6 Which one of the following statements is correct? [1] Money is a capital good. [2] A soccer ball is a capital good. [3] A tractor is a capital good. [4] Furniture is an example of a semi-durable good. [5] There is no difference between a final good and an intermediate good.

16 16 Questions 1.7 and 1.8 are based on the following production possibilities curves: Bread B H A D L K C 0 A B Meat 1.7 Which of the following statements is/are correct? a. Point C shows the inefficient use of resources or unemployment. b. Point L shows unemployment. c. Point K is unattainable with reference to curve BB. [1] Only a [2] Only b [3] Only c [4] None of the statements is correct 1.8 Which one of the following statements is correct? [1] A movement from curve AA to curve BB represents a decline in the economy. [2] A movement from curve BB to curve AA shows technological improvement in the production of both goods. [3] It is always possible to produce combination L. [4] Given the available resources combination L is unattainble. [5] Points H, D, K and C represent efficient combinations of bread and meat. 1.9 Which of the following statements is/are correct? a. Rent is the income for capital. b. Money is an important factor of production. c. A capital-intensive production system is dominated by capital goods. d. Government services form part of the secondary sector. [1] a, b and c [2] a, c and d [3] Only a and c [4] Only b and d [5] Only c

17 17 ECS101-6/ Which of the following statements is/are correct? a. The market system is dominated by the free interaction of supply and demand. b. The command system is dominated by the decisions of the country s armed forces. c. A mixed economy is based on a mixture of command, tradition and the market. [1] Only a and b [2] Only a and c [3] Only a [4] Only b [5] All the statements are correct 1.11 Which of the following statements is/are correct? a. A flow variable is measured at a particular point in time. b. The gold production in South Africa is an example of a stock variable. c. Your annual income is an example of a flow variable. [2] Only b and c [3] Only a and b [4] Only c [5] Only b 1.12 Which one of the following statements is correct? [1] The flow of income and spending is in the same direction as the flow of goods and services. [2] Households sell their labour in the factor market. [3] The main flows in the economy are income, money and investment. [4] The main participants in the economy are politicians and firms. [5] Firms sell their factors of production in the goods market.

18 18 ASSIGNMENT 02 Unique Number: Closing Date: 14 March 2005 Content: Study Units 4 and 5 of the Study Guide Questions: 12 questions Weight: 30% of the semester mark Answer this assignment on a mark-reading sheet. Place the completed mark-reading sheet in an official assignment envelope and post it to Unisa. You are welcome to submit this assignment through SOL. If this assignment cannot be submitted on the due date or is received after the closing date for whatever reason, it will be sent back to you unmarked and will not contribute to your EXAMINATION ADMISSION and semester mark! It is your responsibility to make sure that Unisa received your assignment in time. If you have not received your assignment results within two weeks of the closing date, please contact the Assignment Section at (012) or address assign@unisa.ac.za Assignment results will also be available on SOL 2 weeks after the closing date. The solutions to this assignment will be mailed to you during April Please work through these solutions. 2.1 Which of the following statements is/are correct? a. Demand refers to the quantities of a good or service that sellers are willing to sell during a certain period. b. The demand curve reflects a positive relationship between the price and the quantity demanded. c. The ceteris paribus condition applies always in economics. [1] Only a [2] Only b [3] Only c [4] a and c [5] None of the statements is correct 2.2 Which of the following statements is/are correct? a. A change in quantity supplied is illustrated by a movement along the demand curve. b. A change in demand is illustrated by a movement along the demand curve. c. Quantity demanded and demand mean the same. [1] Only a [2] Only b [3] Only c [4] All the statements are correct [5] None of the statements is correct 2.3 This question deals with complements. Given that shoes and socks are complements what will happen to the demand for socks if the price of shoes decreases because of an increase in supply? [1] It will decrease. [2] It will increase. [3] It will not change. [4] It is not possible to tell what will happen.

19 19 ECS101-6/ Which factor will shift the supply curve to the left? [1] A decrease in the size of the population. [2] A decrease in the price of the specific product. [3] An increase in labour costs. [4] An increase in the number of sellers. [5] An increase in the productivity of the workers. 2.5 Which of the following statements is/are correct? a. If there is excess demand the price must increase to reach equilibrium. b. If there is excess supply the quantity produced must increase to reach equilibrium. c. If there is excess demand the quantity produced must increase to reach equilibrium. d. If there is excess supply the price must decrease to reach equilibrium. [2] Only a, b and c [3] Only a, b and d [4] Only a and d 2.6 Which of the following statements is/are correct? An increase in the demand for chicken could be caused by a(n) a. fall in the price of chicken. b. increase in the price of a complement (eg rice). c. increase in the price of beef (a substitute). [1] Only a [2] a and b [3] b and c [4] Only c [5] a and c 2.7 Which of the following statements is/are correct? With a simultaneous increase in demand and a decrease in supply a. the equilibrium price of the product will increase. b. the change in the equilibrium price of the product will be uncertain. c. the equilibrium quantity of the product will decrease. d. the change in the equilibrium quantity of the product will be uncertain. [1] a and c [2] b and c [3] a and d [4] b and d 2.8 Which of the following statements is/are correct? If the price of cameras falls there will be a. a decrease in the demand for films (a complement). b. a decrease in the supply of cameras. c. an increase in the quantity of cameras demanded.

20 20 [1] Only c [2] Only b [3] Only a [4] a and c 2.9 Which of the following will cause the demand curve for tea to shift to the right? a. A decrease in the price of milk (a complement). b. A decrease in the price of tea. c. A decrease in the price of coffee (a substitute). [1] Only a [2] Only c [3] a and b [4] b and c [5] Only b 2.10 Which of the following statements is/are correct? a. An increase in the price of product Y will decrease the demand for product X (a substitute). b. An increase in the price of product K will decrease the demand for product L (a complement). c. An increase in the consumers' income will increase the demand for an inferior product. [1] a and b [2] b and c [3] Only a [4] Only b [5] Only c

21 21 ECS101-6/101 Questions 2.11 and 2.12 are based on Figure 1 below. Figure 1 P S D Q 2.11 Which of the following statements is/are correct? a. If a maximum price is set at R60, only 100 units will be supplied. b. If a minimum price is set at R100, fewer units will be sold than at a price of R80. c. If a maximum price is set at R100, black market activities will develop. [2] Only a and b [3] Only b and c [4] Only a [5] Only a and c 2.12 An effective minimum price ) in other words, a minimum price which will have an influence on the market, must be set at a price of [1] R40. [2] R60. [3] R80. [4] R100. [5] Any one of the above prices.

22 22 ASSIGNMENT 03 Unique Number: Closing Date: 28 March 2005 Content: Study Units 6, 7 and 8 of the Study Guide Questions: 12 questions Weight: 30% of the semester mark Answer this assignment on a mark-reading sheet. Place the completed mark-reading sheet in an official assignment envelope and post it to Unisa. You are welcome to submit this assignment through SOL. If this assignment cannot be submitted on the due date or is received after the closing date for whatever reason, it will be sent back to you unmarked and will not contribute to your semester mark! It is your responsibility to make sure that Unisa received your assignment in time. If you have not received your assignment results within two weeks of the closing date, please contact the Assignment Section at (012) or address assign@unisa.ac.za Assignment results will also be available on SOL 2 weeks after the closing date. The solutions to this assignment will be mailed to you during April Please work through these solutions. 3.1 Which of the following statements is/are correct? a. Price elasticity of demand measures the responsiveness or sensitivity of consumers to price changes. b. If the percentage change in the quantity demanded is equal to the percentage change in the price that caused the change in the quantity demanded, the elasticity coefficient will be equal to one. c. Any movement of the price away from the point where the elasticity of demand is equal to one, will result in an increase in the total income. [2] Only a and c [3] Only b and c [4] Only a and b [5] Only a 3.2 Which of the following statements is/are correct? a. Luxury goods and services tend to have a lower price elasticity of demand. b. If the income elasticity of demand (e y ) is positive, the product is a normal good. c. If the income elasticity of demand (e y ) is negative, the product is an inferior good. [2] Only a and b [3] Only a and c [4] Only b and c

23 23 ECS101-6/ Assume that the price of bread increases by 10 per cent and as a result the quantity of bread demanded decreases by 1 per cent. Which of the following statements are correct with reference to the relevant part of the demand curve? a. The price elasticity of demand is equal to 10. b. The price elasticity of demand is equal to 0,1 or c. The price elasticity of demand cannot be calculated from the available information. d. As a result of the price increase the income of producers will definitely decrease. e. As a result of the price increase the income of producers will definitely increase. [1] b and d [2] b and e [3] Only c [4] Only d 3.4 Which one of the following instances points to an elastic demand for the product being sold? [1] A producer tells you that he will lose half of his customers if he raises the price of his product by as little as 5 per cent. [2] A university is informed that its total receipts from registration will actually increase if the fees increase by 10 per cent. [3] A coffee shop owner realises that even though she has reduced the price of her coffee, her revenue from the sale of coffee has not changed. [4] The price of maize increases by 10 per cent, and as a result the revenue of maize farmers increases by 20 per cent. [5] A producer tells you that he will not get consumers to buy more of his product if he reduces the price by a substantial margin. 3.5 If lettuce is an inferior good, an increase in consumers' income will [1] increase the supply of lettuce. [2] decrease the supply of lettuce. [3] cause the equilibrium price of lettuce to fall. [4] cause the equilibrium price of lettuce to rise. [5] increase the demand for lettuce. 3.6 Which of the following statements is/are correct? a. An increase in the consumption of a specific good will always increase both the total utility and marginal utility. b. An increase in the consumption of a specific good will usually decrease the marginal utility and increase the total utility. c. When the marginal utility becomes negative the total utility will decrease. [1] a and c [2] b and c [3] Only a [4] Only b [5] Only c

24 Which of the following statements is/are correct? a. The more units a consumer consumes consecutively of a product, the greater the marginal utility. b. The more units a consumer consumes consecutively of a product, the smaller the total utility. c. When the marginal utility becomes negative it is called disutility. [1] Only a [2] Only b [3] Only c [4] a and c 3.8 Which of the following statements is/are correct? Sarah, a consumer, can only be in equilibrium a. when she, given her income and the prices of the products, maximises her total utility. b. when the marginal utilities for all the goods consumed are equal and her total income is spent, irrespective of the prices of the goods. c. when her weighted marginal utilities for all goods are equal irrespective of her income. [2] Only a and b [3] Only a and c [4] Only a [5] Only c 3.9 A firm's total revenue is equal to [1] total revenue divided by the quantity sold. [2] the additional revenue earned by selling an additional unit of the product. [3] the price of its product multiplied by the quantity sold. [4] the price of its product divided by the quantity sold Which of the following statements is/are correct? a. The relationship between total, average and marginal revenue is the same as the relationship between total, average and marginal cost. b. The long run is a period long enough for a firm to decide whether or not to install for example additional machines. c. The short run is a period during which all the inputs are fixed. [2] Only a and b [3] Only b and c [4] Only c [5] Only a

25 25 ECS101-6/ Which of the following statements is/are correct? a. When a firm's total revenue is equal to its total economic costs, the firm is earning a normal profit. b. When a firm's total revenue is greater than its total economic costs, the firm is earning an economic profit. c. Total economic costs incude explicit and implicit costs. [2] Only a and b [3] Only b and c [4] Only c [5] Only a Question 3.12 is based on Table 1. Complete Table 1 and answer question Table 1 Units produced (Q) Total fixed cost (R) Total variable cost (R) Total cost (R) Average (total) cost (R) Marginal cost (R) Which of the following statements is/are correct? a. It is not possible to calculate the total fixed cost and the total variable cost with the given information. b. The marginal cost of producing the third unit is R28. c. The total variable cost of producing five units is equal to R220. [1] Only a [2] b and c [3] Only b [4] Only c

26 26 ASSIGNMENT 04 Unique Number: Closing Date: 11 April 2005 Content: Study Units 9, 10 and 11 of the Study Guide Questions: 12 questions Weight: 30% of the semester mark Answer this assignment on a mark-reading sheet. Place the completed mark-reading sheet in an official assignment envelope and post it to Unisa. You are welcome to submit this assignment through SOL. If this assignment cannot be submitted on the due date or is received after the closing date for whatever reason, it will be sent back to you unmarked and will not contribute to your semester mark! It is your responsibility to make sure that Unisa received your assignment in time. If you have not received your assignment results within two weeks of the closing date, please contact the Assignment Section at (012) or address assign@unisa.ac.za Assignment results will also be available on SOL 2 weeks after the closing date. The solutions to this assignment will be mailed to you during April Please work through these solutions. 4.1 In perfectly competitive markets all the participants are price takers. This means that [1] all goods sold in the market are identical or homogeneous. [2] there is no government intervention. [3] no individual buyer or seller can affect the market price. [4] buyers or sellers can affect the market price. 4.2 Which of the following statements referring to the demand curve for the product of the firm under perfect competition is/are correct? a. The demand curve slopes down from the top left to bottom right. b. The demand curve is indicated by a horizontal line at the given market price. c. The demand curve is indicated by a vertical line at the quantity produced. d. The demand curve has a negative slope. [1] a and b [2] b and c [3] c and d [4] b and d [5] Only b 4.3 Which of the following statements is/are correct? a. A perfectly competitive firm's profit per unit of output is given by the difference between marginal revenue and marginal cost. b. A firm under perfect competition maximises its profit by choosing the right level of output. c. Under perfect competition, the rising part of a firm's marginal cost curve above the minimum average (total) cost represents the firm's supply curve in the short run.

27 27 ECS101-6/101 [2] Only a and b [3] Only b and c [4] Only a [5] Only b 4.4 Which of the following statements is/are correct? a. In the short run, a firm under perfect competition can earn normal profit only. b. Normal profit refers to a situation in which implicit and explicit costs are covered. c. In the long run, a firm under perfect competition can earn normal profit only. [2] Only a and b [3] Only b and c [4] Only a and c [5] Only b 4.5 Under perfect competition, profit is maximised when a firm produces an output where [1] marginal revenue equals marginal cost, provided marginal cost is rising and lies above minimum average (total) cost. [2] average revenue equals average cost, provided marginal cost is rising and lies above minimum average variable cost. [3] marginal revenue equals marginal cost, provided marginal cost is rising and lies above minimum average variable cost. [4] average revenue equals average cost, provided average cost is rising and lies above minimum average variable cost. 4.6 The two broad categories of imperfect competition are [1] oligopoly and imperfect competition. [2] monopolistic competition and monopoly. [3] perfect competition and monopoly. [4] oligopoly and monopolistic competition. [5] monopoly and oligopoly. 4.7 Collusion is possible under [1] perfect competition. [2] monopolistic competition. [3] perfect competition as well as monopolistic competition. [4] oligopoly. [5] monopoly. 4.8 Which of the following would be associated with a monopoly? a. The ability to influence market price. b. The firm is a price taker. c. The ability to control market output.

28 28 [2] Only a and b [3] Only b and c [4] Only a and c [5] Only b 4.9 Which of the following statements is/are correct? a. For monopolistic competition to exist there must be many buyers and sellers. b. Under monopolistic competition, suppliers have an incentive to advertise their products. c. Under perfect competition and monopolistic competition the firm's demand curve for the product is downward-sloping. [2] Only a and b [3] Only a and c [4] Only a [5] Only b 4.10 Which of the following statements is/are correct? a. The labour market is a factor market and a link between suppliers and demanders. b. Labour services are transferable from one person to another. c. The nominal wage is the quantity of goods and services that can be purchased with the money wage. [1] a and b [2] b and c [3] a and c [4] Only a [5] Only c 4.11 The market demand curve for labour will shift to the right, ceteris paribus, because of a. a decrease in the number of firms. b. a decrease in the price of the product. c. a decrease in the productivity of the labourers. d. an increase in the price of a complementary factor of production. [1] Only a and b [2] a, b and c [3] a, c and d [4] Only c and d

29 29 ECS101-6/ Which of the following statements is/are correct? a. Trade unions can attempt to raise the wage rate by assisting firms to raise supply of the product of the industry. b. Fixing a minimum wage below the equilibrium wage will result in an excess supply of labourers. c. People are engaged in informal sector activity because they cannot find employment in the formal sector. [1] a and c [2] b and c [3] Only a [4] Only b [5] Only c

30 30 ASSIGNMENTS SECOND SEMESTER ASSIGNMENT 01 Unique Number: Closing Date: 1 August 2005 Content: Study Units 1, 2 and 3 of the Study Guide Questions: 12 questions Weight: 10% of the semester mark Answer this assignment on a mark-reading sheet. Place the completed mark-reading sheet in an official assignment envelope and post it to Unisa. You are welcome to submit this assignment through SOL. If this assignment cannot be submitted on the due date or is received after the closing date for whatever reason, it will be sent back to you unmarked and will not contribute to your EXAMINATION ADMISSION and semester mark! It is your responsibility to make sure that Unisa received your assignment in time. If you have not received your assignment results within two weeks of the closing date, please contact the Assignment Section at (012) or address assign@unisa.ac.za Assignment results will also be available on SOL 2 weeks after the closing date. The solutions to this assignment will be mailed to you during September Please work through these solutions. Question 1.1 and 1.2 are based on information in this tutorial letter: 1.1 Which of the following statements is/are correct? a. To be admitted to the examination you must submit assignment 01 or 02 in time. b. If you do not submit assignment 01 or 02 but you submit assignment 03 or 04, you cannot be admitted to the examination. c. If you are admitted to the examination, all four assignments will contribute to your semester mark. [2] Only a and b [3] Only b and c [4] Only a 1.2 Which of the following statements is/are correct? a. Suppose you do not submit assignment 01, get 50% for assignment 02, 70% for assignment 03 and 35% for assignment 04, your semester mark will be 38,8%. b. Suppose your semester mark is 95% and your examination mark is 46%. You will pass ECS101-6 because your final mark is 50,9%. c. Suppose your semester mark is 20% and your examination mark is 52%. You will pass ECS101-6 because you have more than 50% in the examination.

31 31 ECS101-6/101 [1] a and b [2] b and c [3] Only a [4] Only b 1.3 Which of the following statements is/are correct? a. Because of scarcity we are forced to make choices. b. Because of choices there must be some opportunity cost. c. Choice, scarcity and opportunity cost are totally unrelated. [2] None of the statements is correct [3] Only a [4] Only c [5] Only a and b 1.4 Which of the following statements is/are positive statements? a. Orlando Pirates FC is the greatest soccer team. b. The South African inflation rate is too high. c. The interest rate was lower in 2004 than in [1] Only a [2] Only b [3] Only c [4] a and c 1.5 Which one of the following is a macroeconomic issue? [1] A fall in the demand for wine. [2] An increase in the supply of tractors. [3] An increase in the total production of bananas in Mpumalanga. [4] A fall in the demand for South African exports of goods and services to the rest of the world. [5] A fall in the price of bicycles.

32 32 Questions 1.6 and 1.7 are based Figure 1. Figure 1 Beef J A W B N 0 J G Pork 1.6 Which one of the following statements is correct? [1] A movement from point B to point A is not a true reflection of opportunity cost. [2] A movement from point W to point A indicates economic growth. [3] A movement from point A to point W indicates an improvement in the production of beef. [4] A movement from the origin (0) to point W represents unemployment. [5] A movement from point A to point B illustrates the concept of opportunity cost. 1.7 Which of the following statements is/are correct? a. Point N represents unemployment as the production factor labour is not used effeciently. b. A movement from curve JJ to curve JG indicates unemployment. c. A movement from curve JJ to curve JG indicates a technological improvement in the production of pork. d. Point W is the point of inefficiency. [1] All statements are correct [2] None of the statements is correct [3] Only b and c [4] Only b [5] Only a and c 1.8 Which of the following statements is/are correct? a. Flour used in a bakery is an example of a final good. b. The Gariep dam is an example of a capital good. c. Sunshine is usually regarded as a free good and has no price. [1] Only a and b [2] Only a and c [3] Only b and c [4] Only c [5] All the statements are correct

33 33 ECS101-6/ Which one of the following forms part of the secondary sector? [1] Raw materials like agriculture, fishing and forestry products. [2] Primary and high school education. [3] The manufacturing of clothes and shoes. [4] The Transnet bus services between Johannesburg and Durban. [5] The production of gold by the gold mines Which of the following statements is/are correct? a. The South African economy is based on the command system because a lot of people work in the government sector. b. The traditional system is dominant in South Africa because a lot of people speak traditional languages. c. Under a market system sellers and buyers converge in the main streets of big cities and start selling their products there. d. The command system is not part of the mixed system. [1] Only a [2] a and b [3] b and c [4] Only d 1.11 Which of the following statements is/are correct? a. The three major flows in the economy are production, spending and money. b. You can only sell your labour in the goods market. c. Firms sell in the goods market. [1] Only a [2] Only b [3] Only c [4] None of the statements is correct 1.12 Which of the following statements is/are correct? a. Capital is a flow variable. b. The number of births in South Africa is a stock variable. c. Profit and loss are flow variables. [1] Only a [2] Only b [3] Only c [4] None of the statements is correct

34 34 ASSIGNMENT 02 Unique Number: Closing Date: 15 August 2005 Content: Study Units 4 and 5 of the Study Guide Questions: 12 questions Weight: 30% of the semester mark Answer this assignment on a mark-reading sheet. Place the completed mark-reading sheet in an official assignment envelope and post it to Unisa. You are welcome to submit this assignment through SOL. If this assignment cannot be submitted on the due date or is received after the closing date for whatever reason, it will be sent back to you unmarked and will not contribute to your EXAMINATION ADMISSION and semester mark! It is your responsibility to make sure that Unisa received your assignment in time. If you have not received your assignment results within two weeks of the closing date, please contact the Assignment Section at (012) or address assign@unisa.ac.za Assignment results will also be available on SOL 2 weeks after the closing date. The solutions to this assignment will be mailed to you during September Please work through these solutions. 2.1 Which of the following statements is/are correct? a. If you do not have the means to buy something, you do not have a demand for it. b. Demand and supply are flow variables which are measured over time. c. Supply can be defined as the quantities of a good or service that consumers plan to buy. d. No variable in economics can be explained by only one other variable. Therefore we always use the ceteris paribus condition. [2] Only a, b and d [3] Only b, c and d [4] Only a, c and d [5] Only b and d 2.2 Which one of the following factors will not shift the demand curve? [1] A change in the size of the population. [2] Income increases. [3] Changes in the tastes of the consumers. [4] An increase in the price of the specific product. [5] A change in the price of a related product.

35 35 ECS101-6/101 Questions 2.3 and 2.4 are based on Figure 1. Figure 1 P D D 1 B C 0 D D 1 Q 2.3 Which of the following statements is/are correct? a. A movement from point B to point C indicates a change in demand. b. A shift from curve DD to curve D 1 D 1 indicates an increase in demand. c. The point of equilibrium is indicated by the distance between point B and point C. [1] Only a [2] Only b [3] Only c [4] Only a and c [5] All the statements are correct 2.4 Which one of the following statements is correct? [1] A shift of the curve from D 1 D 1 to DD indicates an increase in the population. [2] A change in technology will cause the curve to shift. [3] A decrease in population will force the curve upwards. [4] An increase in the quantity demanded is indicated by a movement from point B to point C. [5] A change in supply will also change the DD curve. 2.5 Which one of the following statements will cause the supply curve to shift to the right? [1] An increase in quantity supplied. [2] A change in demand. [3] A decrease in the number of companies. [4] An increase in the price of inputs, like labour costs. [5] An improvement in technology. 2.6 This question deals with complements in production. Assuming that wheat and bran are complements in production. What is going to happen to the supply of bran if the price of wheat increases?

36 36 [1] It will decrease. [2] It will not change. [3] It will increase. [4] It is unpredictable. 2.7 Which of the following statements is/are correct? a. If the quantity demanded is 100 and the quantity supplied is 50 then there is an excess supply of 50. b. If the quantity demanded is 300 and the quantity supplied is 10 then there is an excess demand of 290. c. If quantity supplied is 500 and quantity demanded is 500, there is equilibrium in the market. [1] a and b [2] a and c [3] b and c [4] Only c [5] Only b 2.8 Which of the following statements is/are correct? When demand and supply increase simultaneously a. the equilibrium quantity will increase. b. the equilibrium price and equilibrium quantity will increase. c. the direction of change in the equilibrium price will be uncertain. [1] Only a [2] Only b [3] Only c [4] a and c 2.9 Fixing a maximum price for meat above the equilibrium price will [1] result in an excess demand for meat. [2] result in an excess supply of meat. [3] not disturb the market forces If goods X and Y are substitutes and the price of X increases because of a decrease in the supply of X, which one of the following will be observed, ceteris paribus? [1] an increase in the price of Y together with a decrease in the quantity traded of Y. [2] a decrease in the price and the quantity traded of Y. [3] an increase in the price and a shift of a curve. [4] a decrease in the price of Y together with an increase in the quantity traded of Y. [5] none of the above alternatives.