Exam (elaborations)
ECS1500 - Economics 1500 Assignment 02 Semester 01 & Semester 02 Year 2021
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Exam (elaborations) ECS1500 - Economics 1500
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ASSIGNMENT 02 (FIRST SEMESTER)UNIQUE NUMBER 387492
CLOSING DATE 29 March 2021
LEARNING UNITS 5 to 7
WEIGHT FOR SEMESTER MARK 30% of semester mark
NUMBER OF QUESTIONS 20
2.1 Price elasticity of demand measures how sensitive the quantity demanded is to
changes in the supply of a good.
[1] True
[2] False
Price elasticity of demand is concerned with the sensitivity of the quantity
demanded to a change in the price of the product.
2.2 When the demand for product X is inelastic, it means that the quantity demanded
for product X is sensitive to a change in the price level.
[1] True
[2] False
Demand is said to be inelastic when the quantity demanded changes in response
to a change in price, but the percentage change in the quantity is less than the
percentage change in the price of the product.( It is sensitive but lesser) –
Question is a bit vague
2.3 Microeconomics deals with individual parts of the economy, such as decisions by
individual consumers, households and firms.
[1] True
[2] False
In microeconomics the focus is on individual parts of the economy. The prefix
“micro” comes from the Greek mikros meaning small. In microeconomics the
decisions or functioning of decision makers such as individual consumers,
households, firms or other organisations are considered in isolation from the rest
of the economy.
, 2.4 The national accounts can be used to measure the income of all economic
participants in a country.
[1] True
[2] False
The national accounts, total spending (or expenditure) during any particular
period is also always equal to total production and income during that period.
2.5 The basket that is used to measure the Producer Price Index (PPI) includes
services and excludes capital goods.
[1] True
[2] False
The PPI is therefore based on a completely different basket of items than the
CPI. the PPI is that it includes capital and intermediate goods, but excludes
services (which account for half of the CPI basket).
Questions 2.6 to 2.20 are multiple-choice questions. Only one of the options [1], [2],
[3], [4] or [5] is correct. You have to choose the option that you think is correct.
2.6 If the quantity of avocados demanded changes from 2000 boxes to 3000 boxes
per week because the price has changed from R700 to R500, the price
elasticity of demand for avocados will be … .
[1] 0,57
[2] 0,825
[3] 1,75
[4] 5
Students should be well acquainted with the formula for elasticity. (Bottled
water example)
= (1000/2000)/ (200/700)
= 1.75
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