Question 1:

1.1) Describe the difference between the terms Cost and Price. (4 Marks)

1.2) Gregory is given a weekly allowance of R50 to spend on his two favourite snacks, Coke and Lays chips. The price of Coke is R10 and the price of Lays chips is R5. He spends his entire allowance on these two goods. Using the information provided, complete the table below by identifying the number of cokes and chips he purchases for each combination. (12 Marks)

1.3) After viewing the different combinations of Coke and Lays, Gregory is interested in identifying his Marginal, Total and Weighted marginal utility for each packet of lays chips. With the use of the information provided in the previous question,
complete the table below to provide. (8 Marks)

1.4) How many packets of Lays chips did Gregory have to eat to attain his highest level of Marginal utility? (1 Mark)

2.1) Using the graph below, explain the behaviour of the Total cost, Total variable cost and Total fixed cost curves. (9 Marks)

2.2) Jabulani owns a tyre shop and wants to construct a long-run average cost curve to better understand the financial standing of his company. The selling price of one tyre is R500. Jabulani sold 10 tyres for the month of June, which amounted to a total of R5000 in sales. The cost of producing 10 tyres for the month of June was R12 000. Using the information provided, construct an appropriate long-run average cost curve that relates to the scale of Jabulani’s tyre shop and identify the type of curve. (7 Marks)

2.3) In order for a monopolistic competition to exist and operate, there are certain conditions that have to be met. Identify and explain these conditions. (4 Marks)

2.4) Thabo’s coffee shop operates in a perfectly competitive market and due to the COVID19 pandemic, the company is currently making an economic loss. Explain the process as to how Thabo’s coffee shop can attain a normal economic profit in the long run. (5 Marks)

3.1) GDP can be calculated with the use of various approaches. A common way is to use the income approach. Identify and describe any three (3) components that make up the income approach. (6 Marks)

3.2) Explain why Economists prefer using Real GDP as their preferred indicator as opposed to Nominal GDP. (4 Marks)

3.3) The country, Kronos, is an emerging market in which the production of steel represents the country’s entire GDP. In 2021, 20 000kg of steel was sold at a value of

¥200 per kg. In 2022, 25 000kg of steel was sold at a value of ¥250 per kg. Using the information provided, calculate the following:

i) Nominal GDP for the year 2021 and 2022 (4 Marks)

ii) Real GDP for the year 2021 and 2022 (6 Marks)

3.4) Briefly describe five (5) pitfalls that can occur when calculating GDP. (5 Marks)

Question 4 [25 Marks]

4.1) The predicted relationship between hours of work and the wage rate is called the labour supply curve. The supply curve can take on various shapes such as a backward- bending and a totally inelastic supply of labour curve. Explain what makes these two cruves different. (4 Marks)

4.2) Identify the factors that make up the labour force. (4 Marks)

4.3) Differentiate between Temporary migrant workers and Commuters. (4 Marks)
4.4) Explain the role of financial intermediaries in the economy. (4 Marks)

4.5) Any change in the demand for money or supply of money will cause a temporary money market disequilibrium. The graph below takes a look at how the market for money transitions from a state of disequilibrium back to a state of equilibrium assuming a decrease in the demand for money.

Required:

Using the graph below, explain how a market for money and a market for bonds go back to a state of equilibrium following a temporary disequilibrium. (9 Marks)

Answers to Above Questions on Economics

Answer 1: Cost and price are important concepts from the point of view of economics where cost indicates the amount of Expenditure in curd in producing goods or services whereas the price is the amount of money charged while selling products and services to the customers.