ECS2601 ASSESSMENT 3 SEM 2 OF 2024 EXPECTED QUESTIONS AND ANSWERS
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Course
Economics (ECS2601)
Institution
University Of South Africa (Unisa)
THE ATTACHED DOCUMENT CONTAINS ECS2601 ASSESSMENT 4 SEM 2 OF 2024 EXPECTED QUESTIONS AND ANSWERS. USING IT CORRECTLY FOR PREP WILL HELP YOU SCORE ABOVE 80% IN THIS ASSESSMENT.
Started on Saturday, 25 May 2024, 5:08 PM
State Finished
Completed on Saturday, 25 May 2024, 6:13 PM
Time taken 1 hour 4 mins
Marks 56.00/60.00
Grade 93.33 out of 100.00
Question 1 Suppose Ruhan, Jayde and Chloe all purchase small whiteboard markers for their rooms at R200 each. Ruhan’s willingness to pay was R450, Jayde’s willingness to pay was R350, and Chloe’s
Complete willingness to pay was R300. The total consumer surplus for these three would be ...
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a. R1 100.
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question b. R200.
c. R500.
d. R900.
OSCAR THE
TUTOR
Question 2 A sales tax of R1 per unit of output is placed on a particular firm whose product sells for R5 in a competitive industry with many firms.
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What will happen to the firm’s price? ECS FAC, MAC,
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of 2.00 TAX DSC, QMI,
a. Increase
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question
FIN ,INV MNB
b. Remain the same
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c. More information is needed to determine what will happen to the price.
d. Decrease.
Question 3
The kinked demand curve model of oligopoly assumes that the elasticity of demand …
Complete
Mark 0.00 out
of 2.00
Flag a. is perfectly elastic if price increases and perfectly inelastic if price decreases.
question
b. in response to a price increase is more elastic than the elasticity of demand in response to a price decrease.
c. in response to a price increase is less elastic than the elasticity of demand in response to a price decrease.
d. is constant regardless of whether price increases or decreases.
Question 4 Which of the following curves will coincide on the graph for a monopolist or monopolistic competitor?
Complete
Mark 2.00 out a. The demand, average revenue and marginal revenue curves will coincide.
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b. Only the demand and average revenue curves will coincide.
question
c. Only the demand and marginal revenue curves will coincide.
d. Only the average revenue and marginal revenue curves will coincide.
Question 5 Marginal revenue, shown graphically, is the …
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Mark 2.00 out a. slope of the total revenue curve at a given point.
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b. slope of a line from the origin to the end of the total revenue curve.
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c. vertical intercept of a line tangent to the total revenue curve at a given point.
d. slope of a line from the origin to a point on the total revenue curve.
Question 6 Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether it produces any output.
Complete How does this tax affect the firm’s fixed, marginal, and average costs?
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a. Fixed costs increase by the tax amount.
Flag
question b. Average fixed costs remain unchanged.
c. Marginal and Variable Costs will increase.
d. None of the options are correct
Question 7
Read the following excerpt from Business Tech below and consider the Profit Payoff matrix to answer the question that follow:
Complete
Mark 2.00 out
of 2.00 Competition Commission charges Wesbank and Toyota for collusion
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question
“The Competition Commission has referred motor vehicle finance groups FirstRand Bank, Wesbank, and Toyota Financial Services South Africa Limited (TFS) to the Competition Tribunal for
prosecution on allegations of dividing the market by allocating customers or suppliers.
The Commission’s investigation revealed that Wesbank and TFS entered into an agreement to divide markets by allocating customers or suppliers in the market for the provision of vehicle
finance in contravention of section 4(1)(b)(ii) of the Competition Act. The motor vehicle finance market includes offering vehicle finance, leases, and dealerships financing.
“FirstRand Bank Limited (FirstRand), through its WesBank division, and TFS are involved in the provision of vehicle finance services. They are therefore supposed to compete. They, however,
concluded a shareholder agreement which contains clauses that prevent them from competing,” the commission said.”
After an explicit agreement of collusion was confirmed by the commisison and being found to be illegal, Wesbank and Toyota each decided on their own to provide vehicle finance either at a
cournot level or collusion level.
Consider the Profit Payoff matrix to answer the question.
, OSCAR THE TUTOR
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What is the dominant strategy payoff for Toyota and Wesbank?
ECS FAC, MAC, TAX DSC, QMI,
FIN ,INV MNB
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a.
90, 90
b.
100, 60
c. 80, 80
d. 60, 100
Question 8 Use the following graph to answer the question.
Complete
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of 2.00
Flag
question
The maximum rent seeking is represented by ...
a. A + B + C + D + E
b. None of the options is correct.
c. D + B + C + E
d. B + D
Question 9 Use the following graph for a monopolist to answer the question.
Complete
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of 2.00
Flag
question
, From the graph we can infer that ....
a. MR < D
b. All of the options are correct.
c. An increase in cost result to an increase in price and a reduction in quantity supplied.
d. AR=D
Question 10
Complete
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of 2.00
Flag
question
Refer to the figure bove. Suppose that the government decides to limit monopoly power with price regulation. If the government sets the price at the competitive level, it will set the price at:
a. P3.
b. P4.
c. P2.
d. P1.
Question 11 In a perfectly competitive industry, the amount of output that a firm decides to sell has no effect on the market price, because…
Complete
Mark 2.00 out a. the firm supplies a different good than its rivals.
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b. the short-run market price is determined solely by the firm’s technology.
question
c. the firm’s output is a small fraction of the entire industry’s output.
d. the market price is determined through regulation, by the government.
Question 12 Which statement is true regarding firms in the long run?
Complete
Mark 0.00 out a. All of the options are true.
of 2.00
b. If economies of scale and diseconomies of scale exist, firms will be of the same size.
, Flag c. Firms can be of many different sizes if the long-run supply curve is horizontal.
question
d. No firms will be making economic profits.
Question 13
Rent seeking behaviour can be defined as a social cost that goes beyond a simple deadweight loss.
Complete
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of 2.00
Flag
Select one:
question True
False
Question 14 In the Stackelberg model, the firm that sets output first has an advantage.
Complete
Mark 2.00 out Select one:
of 2.00
True
Flag
question False
Question 15 Which one of the following is NOT an example of price discrimination?
Complete
Mark 2.00 out a. The local country club offering lower rates to beginners.
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b. The lower cost structure of South African Airlines, which allows it to sell cheaper airline tickets.
question
c. “Buy two, get one free” pizza promotions at Little Italy Pizzeria.
d. Cheaper electricity during off-peak periods.
Question 16 Price discrimination requires the ability to sort customers and the ability to prevent arbitrage.
Complete
Mark 2.00 out Select one:
of 2.00
True
Flag
question False
Question 17 Which is NOT true of state-owned and managed natural monopolies?
Complete
Mark 2.00 out a. X-inefficiency is common because the incentives for profit are missing.
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b. Bureaucrats frequently maximise the operating budgets of their departments rather than function with a profit-maximisation objective.
question
c. The wise state government will set price equal to average total cost (ATC) so that losses will not have to be borne by the taxpayer.
d. The state is better able to price at marginal cost (MC) because it can use its taxing power to cover the losses that result from the MC pricing.
Question 18 A monopolist engages in perfect price discrimination …
Complete
Mark 2.00 out a.
of 2.00 the marginal revenue curve lies below the demand curve.
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question
b.
the demand curve and the marginal revenue curve are identical.
c. the marginal revenue curve becomes horizontal.
d.
marginal cost becomes zero.
Question 19 A firm producing seven units of output has an average total cost of R150 and has to pay R350 to its fixed factors of production. The average variable cost is …
Complete
Mark 2.00 out a. R300.
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b. R100.
question
c. R50.
d. R200.
Question 20 If a firm hires a currently unemployed worker, the opportunity cost of utilizing the worker’s services is zero.
Complete
Mark 2.00 out Select one:
of 2.00
True
Flag
question False
Question 21 Suppose a monopolistically competitive firm is making a profit in the short run. As new firms enter, the incumbent firm’s demand and marginal revenue curves shift inward, reducing the profit-
Complete maximizing quantity.
Mark 2.00 out
of 2.00 Select one:
Flag True
question
False
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