The Independent Institute of Education
2016
MODULE NAME:
MODULE CODE:
PRINCIPLES OF MICROECONOMICS
PMIC6111
PRINCIPLES OF MICROECONOMICS
PMIC6111d
PRINCIPLES OF MICROECONOMICS
PMIC6111e
PRINCIPLES OF MICROECONOMICS
PMIC6111f
PRINCIPLES OF MICROECONOMICS
PMIC6111p
PRINCIPLES OF MICROECONOMICS
PMIC6111w
ECONOMICS A (MICRO)
ECMS6211
ASSESSMENT TYPE:
TEST (PAPER ONLY)
TOTAL MARK ALLOCATION:
60 MARKS
TOTAL HOURS:
1 HOUR (+5 minutes reading time)
STUDENT NAME:
STUDENT NUMBER:
INSTRUCTIONS:
1.
Please adhere to all instructions in the assessment booklet.
2.
Independent work is required.
3.
Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4.
You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5.
Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6.
Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7.
Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1.
This is a CLOSED BOOK assessment.
2.
Calculators are allowed.
3.
For multiple-choice questions, give only one (1) response per question. The marker will
ignore any question with more than one answer, unless otherwise stated. You should,
therefore, be sure of your answer before committing it to paper.
4.
Answer All Questions.
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Page 1 of 6
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Question 1
2016
(Marks: 20)
Multiple-choice questions: Select one (1) correct answer for each of the following. In your answer
booklet, write down only the number of the question and next to it, the letter of the correct
answer.
Q.1.1
Which one of the following is the most accurate definition of economics?
(a)
(2)
Economics is the study of stocks and bonds;
(b) Economics is the study of how peoples allocate unlimited resources;
(c)
Economics is the study of how consumers choose to spend their income;
(d) Economics is the study of how society chooses to allocate scarce resources.
26. A
Q.1.2
The most fundamental concepts underlying the discipline of economics are
(a)
(2)
Scarcity and choice;
(b) Supply and demand;
(c)
Money, stocks, and bonds;
(d) Inflation and unemployment.
Q.1.3
The production possibilities curve shows the various:
(a)
(2)
Prices that can be charged for capital and consumption goods;
(b) Combinations of prices and outputs that can be produced;
(c)
Combinations of goods the economy has the capacity to produce;
(d) Combinations of resources and prices that the economy can produce.
PP
Q.1.4
The process through which an economy’s production possibilities curve shifts
(2)
outward is:
(a)
Full-employment management;
(b) Investment;
(c)
Resource depletion;
(d) Out-resourcing.
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The Independent Institute of Education
Q.1.5
When a consumer makes a choice, they incur a cost and this is referred to as:
(a)
2016
(2)
The cost of supply;
(b) The price of goods purchased;
(c)
The scarcity cost;
(d) Opportunity cost.
Q.1.6
Which of the following is not an example of a factor of production?
(a)
(2)
A forest;
(b) A computer program;
(c)
A labour leader;
(d) Rands.
Q.1.7
An increase in the expected future price of a good will cause the current supply for (2)
the good to:
(a)
Decrease, which is a shift of the supply curve to the left;
(b) Decrease, which is a shift of the supply curve to the right;
(c)
Increase, which is a shift of the supply curve to the left;
(d) Increase, which is a shift of the supply curve to the right.
Q.1.8
The ‘ceteris paribus’ clause in the law of demand does not allow which of the
(2)
following factors to change?
(a)
Consumer tastes and preferences;
(b) The prices of other goods;
(c)
Expectations;
(d) All of these.
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The Independent Institute of Education
Q.1.9
2016
For the price of R5, Sam buys 10 units of a product; when the price increases to
(2)
R6, Sam buys 8 units. Martha says Sam's demand has decreased. Is Martha
correct?
(a)
Yes, Martha is correct. Sam's demand has decreased;
(b) No, Martha is incorrect. Sam's demand has increased;
(c)
No, Martha is incorrect. Sam's quantity demanded has decreased, and his
demand has not changed;
(d) No, Martha is incorrect. Sam's quantity demanded has increased, and his
demand has increased.
Q.1.10
An economic system:
(a)
(2)
Requires a grouping of private markets linked to one another;
(b) Is the organisation of production, consumption and distribution to answer
the basic economic questions;
(c)
Requires a centralised authority to coordinate economic activity;
(d) Is a plan or scheme that allows a firm to make money at some other firm’s
expense.
Question 2
(Marks: 10)
State if the following statements are true or false.
Q.2.1
Points on the PPC represent attainable and efficient combinations of the two goods
(1)
being presented.
Q.2.2
A truck owned by a logistics company can be classified as a capital good.
(1)
Q.2.3
A change in the quantity demanded is illustrated by a shift in the demand curve.
(1)
Q.2.4
If the price of a particular product/ service increases, there will be an increase in
(1)
the quantity supplied.
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The Independent Institute of Education
2016
Q.2.5
The remuneration of labour is wages and salaries.
(1)
Q.2.6
In a market economy, decisions regarding the production and consumption result
(1)
from the interaction of consumers and producers.
Q.2.7
The statement ‘all economies should become socialist’ is normative.
(1)
Q.2.8
Loss and savings are examples of stock variables.
(1)
Q.2.9
A supply curve shows the quantity of a product demanded at a particular price.
(1)
Q.2.10 Excess demand refers to a situation where the quantity demanded is greater than
(1)
the quantity supplied.
Question 3
(Marks: 10)
Match-the-columns question: Match the term in Column A with the correct description from
Column B. In your answer booklet, write down only the question number and, next to it, the letter
of the correct answer.
Column A
Column B
Q.3.1
Consumer surplus
a.
‘what is’ among economic relationships
Q.3.2
Equilibrium quantity
b.
Involves giving an opinion or a value judgement
Q.3.3
Supply curve
c.
The difference between what consumers pay and the
value that they are willing to pay.
Q.3.4
Positive economics refers
d.
to
Q.3.5
A traditional economic
Is slow to adapt to changing conditions and resists
innovation
e.
system
The quantity at which the quantity demanded is equal
to quantity supplied
g.
Shows the relationship between quantity supplied of a
particular product and price
i.
Refers to quantity of a good or service that producers
plan to sell at each possible price during a certain
period
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Page 5 of 6
The Independent Institute of Education
2016
Question 4
(Marks: 10)
Q.4.1 List any three (3) determinants of supply.
(3)
Q.4.2 Define the substitution effect and explain how it works when the price increases.
(3)
Q.4.3 Differentiate between a change in demand and a change in the quantity demanded. (4)
Question 5
(Marks: 10)
Q.5.1
Make use of a well labelled diagram to illustrate an excess supply.
(4)
Q.5.2
Briefly discuss the main strengths and weaknesses of the three (3) basic types of
(6)
an economic system
END OF PAPER
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