ECONOMICS 110 / EKONOMIE 110
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1 FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES /FAKULTEIT EKONOMIESE EN BESTUURSWETENSKAPPE UNIVERSITY OF PRETORIA / UNIVERSITEIT VAN PRETORIA DEPARTMENT OF ECONOMICS / DEPARTEMENT EKONOMIE ECONOMICS 110 / EKONOMIE As soon as the results of examinations and supplementary examinations are available, the Administration of the Faculty will put them on the notice boards next to the Human Sciences Building and thereafter mail them to individual candidates, as soon as possible. Alle eksamen- en hereksamenuitslae sal so gou as wat dit beskikbaar is deur die fakulteitsadministrasie op die kennisgewingborde langs die GW- GEBOU aangebring word en so spoedig moontlik daarna aan kandidate gepos word. 2. Lecturers and Administrative staff are NOT allowed to give candidates their results PERSONALLY or by TELEPHONE. G E E N uitslae sal deur die administrasie of dosente telefonies verskaf word nie. Results will be available on the Internet address: Uitslae sal beskikbaar gestel word op die Internet: adres 3. Supplementary examinations are granted automatically for students who has a final mark of above 40% but did not pass. Hereksamens word outomaties toegeken vir kandidate wat n finale punt van meer as 40% behaal het maar nie geslaag het nie. 4. Supplementary examination take place on the 19 th June 2007 between 8:00-13:00 in the CBT labs. Hereksamen vind op die 19 de Junie 2007 plaas tussen 8:00-13:00 in die RGT lab 5. Students may gain access to their scripts on 13 June 2007 strictly between 09:00 and 11:00 venues will be announced on Click-UP. Insae in vraestel vind op 13 Junie 2007 plaas streng tussen 9:00 en 11:00 die lokale sal op Click-UP bekend gemaak word.
2 DEPARTMENT OF ECONOMICS / DEPARTEMENT EKONOMIE ECONOMICS 110 EXAMINATION / EKONOMIE 110 EKSAMEN 28 MEI 2007 Marks / Totaal: 70 punte Time / Tyd: 90 minute Examiners / Eksaminatore: Mnr M Meiring Mnr R Seymore Mnr E Nyamonga Mnr A Makochekanwa Mnr C Lotter Mnr J van Rensburg External Examiner / Eksterne Eksaminator : Prof AC Jordaan Question 1 / Vraag 1 Answer the following multiple choice questions be writing only the letter of the correct alternative next to the question number e.g. 1.5 c (Each question is 2 marks) Beantwoord die volgende meervoudige keuse vrae deur slegs die letter van die korrekte alternatief langs die vraag nommer neer te skryf bv. 1.5 c (Elke vraag tel 2 punte) 1.1 If there is an increase in the price of manure (a joint product in dairy farming) then, ceteris paribus, there will be / As daar 'n styging in die prys van kraalmis ('n gesamentlike produk in melkboerdery) sou plaasvind, sal, ceteris paribus. a) an increase in the supply of dairy farmers / die aanbod van melkboere toeneem. b) a decrease in the demand for manure / die vraag na kraalmis afneem.. c) an increase in the demand for manure / die vraag na kraalmis toeneem. d) a decrease in the supply of dairy farmers / die aanbod van melkboere afneem.. e) a decrease in the demand for dairy products / die vraag na suiwelprodukte afneem Which of the following will definitely result in a fall in equilibrium price? Watter van die volgende sal bepaald 'n daling in ewewigsprys tot gevolg hê? a) An increase in both demand and supply / 'n Toename in beide vraag en aanbod. b) A decrease in both demand and supply / 'n Afname in beide vraag en aanbod c) An increase in demand together with a decrease in supply / 'n Toename in vraag tesame met 'n afname in aanbod. d) A decrease in demand together with an increase in supply / 'n Afname in vraag tesame met 'n toename in aanbod. e) A decrease in supply only / 'n Afname in aanbod alleenlik. 1.3 In the market for first year economics textbooks, assuming everything else remains unchanged, the equilibrium price of textbooks will increase if: In die mark vir eerstejaar-ekonomieteksboeke sal die ewewigsprys van teksboeke styg, mits alle ander dinge onveranderd bly, indien: a) there is a surplus of textbooks / daar 'n surplus teksboeke is. b) the price of university education, a complement, increases / die prys van universiteitsonderrig, 'n komplement, styg. c) the supply of textbooks increases / die aanbod van teksboeke toeneem. d) the cost of the publication of textbooks increases / die koste van die publikasie van teksboeke styg. e) there is a drop in the cost of paper necessary to produce textbooks / daar 'n daling plaasvind in die koste van die papier wat nodig is om die teksboeke te produseer. 1.4 If e y > 0; it is considered that: Indien e y > 0 is; beteken dit dat: a) The prcie elasticity of income is positive. / Die pryselastisiteit van inkomste is positief. b) The price elasticity of demand is relative elastic / Die pryselastisiteit van vraag is relatief elasties. 2
3 c) The income elasticity of demand refers to normal goods / Die inkome-elastisiteit van vraag verwys na normale goedere. d) The income elasticity of demand refers to inferior goods / Die inkome-elastisiteit van vraag verwys na minderwaardige goedere. e) None of the above / Nie een van bogenoemde nie. 1.5 Assume that an increase in the price from R100 to R250, will lead to an increase in the quantity supplied from 100 to 150 units of a product. Then: Veronderstel dat die toename in die prys vanaf R100 na R250, lei tot n toename in die hoeveelheid aangebied vanaf 100 tot 150 eenhede van n produk. Dan sal: a) e s = 0.33 b) e s = 0.55 c) e s = 1.80 d) e s = 3.00 e) e p = Which of the following statements is/are incorrect: Watter van die volgende stellings is onwaar: a) An array of indifference curves is referred to as an indifference map / n Versameling onsydigheidskrommes word n onsydigheidskaart genoem. b) The closer to the origin, the lower is the level of utility of the consumer / Hoe nader aan die oorsprong, hoe laer is die nutsvlakke van n verbruiker. c) Indifference curves never intersect/touch / Onsydigheidskrommes raak/sny mekaar nie. d) The level of need satisfaction differs along an indifference curve, irrespective of the combination of any two goods that is consumed / Die vlak van behoeftebevrediging verskil op n onsydigheidskormme, ongeag watter kombinasie van twee produkte verbruik word. e) The Marginal Rate of Substitution (MRS) decreases along an indifference curve as you move from left to right on the curve / Die Grens/Marginale Koers van Substitusie (MRS) neem af soos wat daar van links na regs langs n onsydigheidskromme beweeg word. Use the table below to answer the following two questions. The Middle Age Firm s fixed cost is R Gebruik die onderstaande tabel om die volgende twee vrae te beantwoord. Die Middeleeuse Firma se vaste koste is R Quantity Coaches (total product) Aantal Koetse (totale produk) Total variable cost (TVC) (Rands) Totale veranderlike koste (TVC) (Rande) When the fourth coach is built, the firm s average cost is: Wanneer die vierde koets gebou word, is die firma se gemiddelde koste: a) R b) R c) R d) R e) None of the above / Nie een van bogenoemde nie 3
4 1.8 The Marginal Cost of the sixth coach is: Die Grenskoste/Marginale Koste van die sesde koets is: a) R b) R c) R d) R e) None of the above / Nie een van bogenoemde nie 1.9 Which of the following statements is/are correct: Watter van die volgende stellings is waar: a) Returns to scale refers to the short term realtionship between inputs and outputs / Skaalopbrengs verwys na korttermynverband tussen insette en uitsette. b) A firm experiences returns to scale as the cost per unit produced, decreases as the scale of production increases / n Firma ondervind skaalvoordele as die koste per eenheid wat geproduseer word, daal namate die produksieskaal toeneem. c) Economies of scope refers to a situation where two related products can rather be produced by two closely related firms, instead on only one firm / Omvangsvoordele verwys na n situasie waar twee verwante produkte eerder deur twee konkruente firma s vervaardig word, eerder as deur net een firma. d) There is no relationship between increasing returns to scale and economies of scale / Daar is geen verband tussen stygende skaalopbrengs en skaalvoordele nie. e) Decreasing returns to scale is experienced when unit costs increase as the production output decreases / Skaalnadele word ondervind wanneer eenheidskostes styg namate die produksiehoeveelheid afneem The following question refers to the table below: Die volgende vraag handel oor die onderstaande tabel: Cardinal Utility of the Knowitall Familiy / Kardinale Nut vir die Alwetende Familie Apples => P A = R2.00 per bag Appels => P A = R2.00 per sakkie Bread => P B = R1.00 per loaf Brood => P B = R1.00 per brood Cheddar Cheese => P C = R3.00/kg Cheddar Kaas => P C = R3.00/kg Units/Eenhede TU A MU A WMU A TU B MU B WMU B TU C MU C WMU C If the family s income is R What would be the optimal combination to maximuse their total utility? Indien die familie se inkomste R45.00 is; wat sal die kombinasie wees wat hul totale nut sal maksimeer? a) 10 bag of Apples / 9 loafs of Bread / 9kg Cheddar Cheese / 10 sakke Appels / 9 Brode / 9kg Cheddar Kaas. b) 7 bags of Apples / 7 loafs of Bread / 8kg Cheddar Cheese / 7 sakke Appels / 7 Brode / 8kg Cheddar Kaas. c) 6 bags of Apples / 7 loafs of Bread / 5kg Cheddar Cheese / 6 sakke Appels / 7 Brode / 5kg Cheddar Kaas d) 8 bags of Apples / 8 loafs of Bread / 7kg Cheddar Cheese / 8 sakke Appels / 8 Brode / 7kg Cheddar Kaas. e) 6 bags of Apples / 3 loafs of Bread / 10kg Cheddar Cheese / 6 sakke Appels / 3 Brode / 10kg Cheddar Kaas. 4
5 1.11 If the growth rate of the working age population is less than the growth rate of the labour force As die groeikoers van die bevolking van werkende ouderdom kleiner as dié van die arbeidsmag is: a) labour force participation rates will decrease / daal die arbeidsmagdeelnamekoers. b) labour force participation rates will increase / styg die arbeidsmagdeelnamekoers. c) labour force participation rates will not change, but unemployment will increase / verander die arbeidsmagdeelnamekoers nie, maar neem werkloosheid toe. d) labour force participation rates will not change, but unemployment will decrease / verander die arbeidsmagdeelnamekoers nie, maar neem werkloosheid af. e) the effect on labour cannot be determined / kan die effek op die arbeidsmagdeelnamekoers nie bepaal word nie Workers are likely to have more bargaining power to negotiate higher wages with employers if Werkers sal waarskynlik meer bedingingsmag hê om hoër lone met werkgewers te beding as: a) they belong to a trade union / hulle aan 'n vakbond behoort. b) they are more skilled / hulle beter geskoold is. c) there is limited substitution of capital for labour / daar beperkte vervanging van arbeid deur kapitaal plaasvind. d) there is an excess demand for labour / daar 'n oormaatvraag na arbeid is. e) All of the above are correct / Al die bogenoemde is korrek If foreign competition for South African producers of textiles increased, then we would expect the demand for domestically produced textiles to and the demand for labour to. As buitelandse mededinging vir Suid-Afrikaanse tekstielprodusente sou toeneem, sou ons verwag dat die vraag na binnelands vervaardigde tekstiele en die vraag na arbeid sal. a) increase; increase / sal toeneem; toeneem b) increase, decrease / sal toeneem, afneem c) decrease, increase / sal afneem, toeneem d) decrease, decrease / sal afneem, afneem e) stay the same; decrease / onveranderd sal bly; afneem 1.14 If a monopolist can sell 100 units at a price of R20 and 110 units at a price of R19, the marginal revenue for each unit between 100 and 110 is As 'n monopolis 100 eenhede teen 'n prys van R20 kan verkoop en 110 eenhede teen 'n prys van R19, is die grensinkomste vir elke eenheid tussen 100 en 110 a) R19. b) R20. c) R9. d) R1. e) R19, A commercial forest planted to provide raw material inputs into a wood pulp mill would be viewed by economists as. 'n Kommersiële woud wat aangeplant is om die grondstowwe te voorsien wat as insette vir 'n houtpapmeule nodig is, sou deur ekonome beskou word as: a) part of the factor of production, land / deel van die produksiefaktor grond. b) part of the factor of production, labour, since labour has to be used to create and maintain the commercial forest/ deel van die produksiefaktor arbeid, aangesien arbeid gebruik moes word om die kommersiële woud tot stand te bring en in stand te hou. c) part of the capital stock of the economy / deel van die aandelekapitaal/kapitaalvoorraad van die ekonomie. 5
6 d) an unproductive use of land, and therefore not a factor of production / 'n onproduktiewe gebruik van grond, en dus nie 'n produksiefaktor nie. e) an unproductive asset, since it may take several years before the forest is ready for harvesting / 'n onproduktiewe bate, aangesien dit verskeie jaar kan duur voordat die woud gereed sal wees om geoes te word. [30] Question / Vraag What do you understand by the three basic economic questions of what, how and for whom to produce goods and services? (3) Wat verstaan u onder die drie basiese ekonomiese vrae aangaande wat, hoe en vir wie goedere en dienste geproduseer word? 2.2 Graphically illustrate and explain the difference between consumer surplus and producer surplus. Illustreer grafies en verduidelik die verskil tussen verbruikerssurplus and produsentesurplus. (2) 2.3 Use the following information to calculate and interpret the arch price elasticity of demand.(3) Gebruik die onderstaande inligting om die boog-pryselastisiteit van vraag te bereken en te interpreteer Prys /Price Vraag /Demand na /for Denims Hoeveelheid / Quantity per week Question / Vraag With the aid of fully annotated diagram(s); derive a demand curve for an individual consumer using a price consumption curve. (5) Deur slegs van ge-annoteerde diagram(me) gebruik te maak; lei n vraagkromme vir n individuele verbruiker af deur gebruik te maak van n prysverbruikslyn. 3.2 Diagrammatically, show the relationship between production and cost in the short run. (4) Dui diagrammaties die verband tussen produksie en koste op die korttermyn aan. 6
7 Question / Vraag List five characterictics of a perfecty competitive market. (5) Noem vyf eienskappe van 'n volmaakte mededingende mark. 4.2 Illustrate diagrammatically the short term equlibrium of the firm under perfect competition in the case of an economic loss. (4) Illustreer met behulp van n diagram die kort termyn ewewigsposisie van die firma onder volmaakte mededinging vir die geval waar n ekonomiese verlies gemaak word. Question / Vraag Illustrate and explain the social cost of a monopoly. (6) Illustreer en verduidelik die sosiale koste van n monopolie. 5.2 Illustrate diagrammatically what the effect would be of an increase in labour supply on employment and wages in a perfectly competitive labour market. (4) Illustreer diagrammaties die effek van 'n toename in die aanbod van arbeid in 'n volmaak mededingende arbeidsmark op werkverskaffing en lone in n volmaak mededingende mark. Question / Vraag Use the following information to answer the question: The market price of a pie on campus is R5. Some students are of the opinion that pies are not affordable and hand over a petition to the university management wherein they request intervention. As a result, the university set a maximum price of R3.5 per pie on campus. Graphically illustrate the effect of the maximum price on the overall welfare of the student community (students as well as shop owners). (4) Gebruik die volgende inligting om die vraag te beantwoord: Die markprys van n pastei op kampus is R5. Sommige studente beweer dat pasteitjies nie bekostigbaar is nie, en oorhandig a petisie aan die universiteit se bestuur waarin hulle ingryping versoek. As gevolg hiervan, stel die universities bestuur n maksimum prys van R3.5 per pastei op kampus vas. Illustreer grafies die effek van die maksimum prys op die alhele welvaart van die studentegemeenskap (studente asook die winkeleienaars). [40] 7
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