ASSIGNMENT 1 Economics 1 ECON_1 DUE DATE: 3 – 17 September 2021 TOTAL MARKS: 100 INSTRUCTIONS: • • • • • • • • • • • Read each question carefully and determine exactly what is required before attempting to answer. Set out the answers in a systematic way under appropriate headings and subheadings. Number your answers clearly. Ensure that you answer your questions in enough detail to achieve the marks allocated. Use your own words, so the markers can establish whether you have understood the concepts. The markers can then provide you with constructive feedback. Students are reminded that this is an individual effort and group submissions will be penalised. Please refer to the Start Here tab on OLG4Me or the Student Yearbook for the formatting and page layout requirements when typing your assignments. Be mindful of further instructions pertaining to the assessment as provided within the questions. Using the Harvard Referencing style, reference in text and provide a reference list at the end of the assignment. You will be penalised for plagiarising or copying from any source. See the rubric at the end of the assignment for penalisation terms. This assignment is intended for second semester 2021 submission only. This assessment remains the property of the Open Learning Group® and may not be reproduced nor distributed in any way. Economics 2021 Assignment 1 QUESTION 1 [10] Learning outcome: Demand and Supply Product A and Product B are related to each other. They can either be substitute products or complementary products. With the help of graphs indicate the impact on the market for Product A if: 1.1 Product A and Product B are substitutes (5) 1.2 Product A and Product B are complementary. (5) QUESTION 2 [10] ] Learning outcome: Perfect competition Company LALA operates in a perfectly competitive market. With the use of graphs, illustrate the long-term equilibrium of the company and industry. (10) QUESTION 3 [15] Learning outcome: Measuring economic performance Since the onset of the Covid-19, pandemic workers have been off work often due to illness and family responsibility. Productivity levels have dropped drastically in South Africa over the last 18 months. 3.1 Define inflation. 2 of 6 Economics 1 – ECON_1 (1) Economics 2021 Assignment 1 3.2 Graphically illustrate the different types of inflation. (6) 3.3 Referring back to the current situation explained above: (i) State what type of inflation South Africa is experiencing. (1) (ii) What other possible causes contributes to this type of inflation? (4) 3.4 Briefly discuss at least three negative effects of inflation on South Africa. (3) QUESTION 4 [16] Learning outcome: Elasticity 4.1 (i) (ii) (iii) (iv) In each of the following cases, do you think the price elasticity of supply is: perfectly elastic; perfectly inelastic; elastic, but not perfectly elastic; or inelastic, but not perfectly inelastic? Explain your answer and include an illustration: a. An increase in demand this summer for luxury cruises leads to a huge jump in the sales price of a cabin on the MSC Musica departing from Durban. b. The price of a kilowatt of electricity is the same during periods of high electricity demand as during periods of low electricity demand. c. (4) (4) Fewer people want to fly during July than during any other month. The airlines cancel about 10% of their flights as ticket prices fall about 20% during this month. d. (4) Owners of vacation homes in Umhlanga rent out their homes during the summer. Due to the Covid-19 pandemic and the weak economy, a 30% decline in the price of a vacation rental leads to more than half of homeowners to occupy their vacation homes themselves during the summer. Economics 1 – ECON_1 (4) 3 of 6 Economics 2021 Assignment 1 QUESTION 5 [15] Learning outcome: Supply and demand 5.1 Use a diagram to illustrate how each of the following events affect the equilibrium price and quantity of pizza. a. The price of mozzarella cheese rises. (5) b. Consumers expect the price of pizza to fall next week. (5) 5.2 Briefly explain what could possibly contribute to a decrease in demand for pizzas. (5) QUESTION 6 [20] Learning outcome: Production and cost Nkosi’s Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Nkosi owns three frozen-yogurt machines. His other inputs are refrigerators, frozen-yogurt mix, cups, sprinkle toppings, and, of course, workers. He estimates that his daily production function when he varies the number of workers employed (and at the same time, of course, yogurt mix, cups, and so on), is as shown in the accompanying table. Quantity of workers 0 1 2 3 4 5 6 Quantity of frozen yogurt (cups) 0 110 200 270 300 320 330 Nkosi pays each his workers R 80 per day. The cost of his other variable inputs is R 0.50 per cup of yogurt. His fixed cost is R 100 per day. 4 of 6 Economics 1 – ECON_1 Economics 2021 Assignment 1 6.1 Name the fixed inputs and variable inputs in the production of cups of frozen yogurt. (8) 6.2 Calculate variable and total cost for every level of output. (12) QUESTION 7 [14] Learning outcome: Consumer choice 7.1 Define marginal utility. (2) 7.2 The table below shows Thabiso’s total utility from consumption of Spiderman comic books - he is an avid collector. Calculate the values for marginal utility and fill in the blanks in the marginal utility column. Number of comics 0 1 2 3 4 5 (5) Total utility Marginal utility 100 190 270 330 380 7.3 Explain the law of diminishing marginal utility. (2) 7.4 Does Thabiso experience the law of diminishing marginal utility from consuming Spiderman comics? Justify your answer 7.5 (3) Calculate the weighted marginal utility for three comic books if the price of a comic book is R 20. (2) Economics 1 – ECON_1 5 of 6 Economics 2021 Assignment 1 ASSIGNMENT RUBRIC FOR ASSIGNMENT 1 OLG Assignment page not completed in full -1 No Content page: no headings nor page numbers -1 Headings and numbering – not accurate and clear -1 Incomplete sentences; bad structure, poor spelling, and grammar; not proofread and edited -1 Format of: Century Gothic Font, Size 11, 1.5 Spacing, not applied -1 These are the minimum number of references REQUIRED per qualification level: Qualification Number of references Variety of references Higher Certificate Minimum of 3 sources Diploma Minimum of 5 sources BBA Minimum of 7 sources In addition to the study guide and prescribed textbook, at least one academic textbook, academically recognised internet source or academic journal article. In addition to the study guide and prescribed textbook, any academic textbook, academically recognised internet source, and at least two academic journal articles. In addition to the study guide and prescribed textbook, any academic textbook, academically recognised internet source, and at least three academic journal articles. REFERENCING: Marking PENALTY between 0% and 20% 20% 15% NO in-text referencing or reference list. Minimal evidence of referencing (either in text or reference list). Reference technique is not correctly applied. Provide at least ONE source per question. Evidence of referencing in text and/or reference list. Reference technique not applied correctly to all provided reference. Not all text references are 10% captured in the reference list. Not all the references in the reference list appear in the text. Number of references consulted below minimum requirements. Evidence of, and application of correct referencing technique for in-text 5-9% referencing. Evidence of application of correct refencing technique in the reference list. Variety of references consulted must be substantially above the minimum requirements. All of the following are evident and 100% accurate: in-text referencing, 0% reference list, number of required references consulted substantially exceeded. Variety of references consulted. ALL REFERENCES MUST BE ACADEMICALLY RECOGNISED SOURCES, USING CAUTION WITH THE POPULAR PRESS AND AVOIDING WIKIPEDIA, INVESTOPEDIA, BLOGS & CHAT ROOMS 6 of 6 Economics 1 – ECON_1