ECS1501 EXAM PACK 2022. In the market for milk two things happen simultaneously: first, due to increased subsidies from
government, there was an increase in the number of dairy farmers. Second, due to unfavourable economic
growth, the average income per household has decreased. The effect of the ...
SECTION A – COMPULSORY WRITTEN QUESTIONS
Question 1
(1a) In the market for milk two things happen simultaneously: first, due to increased subsidies from
government, there was an increase in the number of dairy farmers. Second, due to unfavourable economic
growth, the average income per household has decreased. The effect of the subsidies is larger than the
effect of the decreased income per household. Draw the market for milk and show the all changes. (5)
(1b) Critically discuss your answer in question 1a, explaining the curves and making reference to any
changes.
Question 2
(2) Calculate the equilibrium quantity and price if the quantity demanded can be represented by the =
1800 + 0,6 and quantity supplied can be represented by = 7200 − 0,2 .
Question 3 (6)
(3a) When a local shop, called Burger Boet, decreases the price of hamburgers from R40 to R35, the
quantity of the hamburgers demanded increases from 800 to 1 150. What is the price elasticity of
demand for a burger at Burger Boet?
(3b) How can Burger Boet increase its total revenue made from hamburgers, based on the price
elasticity of the demand for hamburgers?
Question 4 (6)
(4a) When Sophie’s income increases from R12 000 to R16 000 per month, the quantity of petrol
demanded for her car increased from 40 litres to 45 litres per month. Calculate Sophie’s income
elasticity of demand for petrol.
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(4b) Based on Sophie’s income elasticity of demand for petrol, explain what type of good petrol is.
Question 5 (5)
The following table shows some of the cost information of a firm. Fill in the missing values for A to E.
SECTION B – COMPULSORY MULTIPLE-CHOICE QUESTIONS
1. Economics is _____
[1] A study of the ethics of making money.
[2] The study of how scarce resources are allocated in an attempt to satisfy unlimited wants.
[3] The study of direct and indirect relationships between inputs and outputs in various production
methods.
[4] A sub discipline of business management.
Use the following production possibility curve (PPC) of Narnia to answer questions 2 to 4. Narnia can
only produce swords or ships.
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2. Point ___ shows an efficient use of resources, while point ___ is unattainable.
[1] A; B
[2] B; C
[3] C; D
[4] D; E
3. Narnia is currently producing eight ships but decides to increase the production of ships to 12. What is the
opportunity cost of the decision?
[1] 3 000 swords
[2] 4 000 swords
[3] 6 000 swords
[4] 10 000 swords
4. What will most likely happen when there is an influx of workers into Narnia? [1]
Point E will become unattainable
[2] Point B could become attainable
[3] Narnia will not be able to produce 12 ships anymore
[4] Narnia will not be able to produce 10 000 swords anymore
5. Which one of the following is a positive statement?
[1] A black Porsche looks much better than a red one
[2] BMW makes better cars than Mercedes Benz
[3] Japanese cars are more reliable than American cars
[4] Ferrari is an Italian sports car manufacturer
6. Which of the following is not one of the central economic questions that all economic systems aim to
answer?
[1] What goods and services will be produced?
[2] Who will produce these goods and services?
[3] How will these goods and services be produced?
[4] For whom will these goods and services be produced?
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