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Lecture notes Economics 1A
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EconomicsEnrichment Exercises and solutions
Copyright© 2014
MANAGEMENT COLLEGE OF SOUTHERN AFRICA
All rights reserved, no part of this book may be reproduced in any form or by any
means,including photocopying machines, without the written permission of the
publisher. Certain questions have been modified from The Test Bank: Economics for SA Students, 4 th Edition.
,Economics 1A and 1B Workbook
ECONOMICS 1A
MANCOSA 2
,Economics 1A and 1B Workbook
TABLE OF CONTENTS
CONTENTS PAGE
ENRICHMENT EXERCISES
Study Unit 1: Introduction to Microeconomics 4
Study Unit 2: A closer look at the economic problem of scarcity 9
15
Study Unit 3: The circular flow of income and spending
20
Study Unit 4: Demand, Supply and prices
25
Study Unit 5: Demand and Supply in action
31
Study Unit 6: Elasticity
38
Study Unit 7: The theory of production and cost
44
Study Unit 8: Perfect Competition
49
Study Unit 9: Monopoly and Imperfect competition
MANCOSA 3
, Economics 1A and 1B Workbook
STUDY UNIT 1: AN INTRODUCTION TO MICROECONOMICS
MULTIPLE CHOICE QUESTIONS
1. If the principal concern of economics is the question of how best to use society’s resources, then
economics would be irrelevant if
a. we had unlimited wants.
b. economies were organised around command rather than market principles.
c. economies were organised around market rather than command principles.
d. resources were available in unlimited quantities.
e. incomes were distributed more equally.
2. The problem of economising is essentially one of deciding how to make the best use of
a. virtually unlimited resources to satisfy limited wants.
b. virtually unlimited resources to satisfy virtually unlimited wants.
c. limited resources to satisfy virtually unlimited wants.
d. limited resources to satisfy limited wants.
e. limited resources to generate wants.
3. A basis for the systematic study of economics exists because
a. resources are scarce in relation to material wants.
b. governments interfere with the efficient allocation of scarce resources.
c. individual economic actors cannot be relied upon to make rational economic decisions.
d. resources are plentiful relative to wants, therefore an allocation problem arises.
e. the market consistently fails to allocate resources efficiently, thereby establishing the need to
study economics.
4. Opportunity cost is best defined as
a. the out-of-pocket money costs incurred when a decision is made.
b. the value of the best alternative sacrificed when a choice is made.
c. the value of all the alternatives given up when a choice is made.
d. the value of time lost when a choice is made.
e. both b and c above
MANCOSA 4
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