Grade 10 Economics Exam
June 2013
Time: 120 Minutes
Marks: 120
INSTRUCTIONS
1
Answer THREE questions as follows:
SECTION A: MULTIPLE CHOICE
SECTION B: DATA RESPONSE
SECTION C: ONE QUESTION OUT OF THREE OPTIONS
(+/- 40 minutes)
(+/- 40 minutes)
(+/- 40 minutes)
2
Write the number of the question next to each answer.
3
Number the answers according to the system used in this question paper.
4
Start each SECTION on a NEW PAGE. Leave one to two lines open between subsections of each question.
5
Read each question carefully.
6
A neat and systematic presentation of facts is required.
7
Answer in full sentences.
8
Do not answer more than the required number of questions. Only the required
number of questions, in the order in which they have been handed in, will be
marked.
9
Use only a black or blue pen (graphs / diagrams may be done in pencil).
10
Non – programmable pocket calculators may be used.
THIS QUESTION PAPER CONSISTS OF 9 PAGES AND ONE ANSWER SHEET
SECTION A: MULTIPLE CHOICE
For each question, there are four possible answers: A, B, C or D. Choose the one you
consider correct and record your choice in the appropriate space on the ANSWER SHEET
attached to the question paper.
QUESTION 1
1.1
The diagram shows the production possibility curves of two economies, X and Y.
Which statement about the two economies is correct?
A.
B.
C.
D.
1.2
Both economies always have the identical opportunity costs.
Both economies have the same future growth prospects.
The opportunity costs are constant in both economies.
The two economies can never produce the same combination of products.
In the diagram, LM is an economy’s production possibility curve.
Which statement is correct?
A.
B.
C.
D.
E only is attainable.
F is economically efficient.
G may be economically efficient but is not productively efficient.
H is productively efficient but may not be economically efficient.
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1.3
What is meant by ‘ceteris paribus’ in economic analysis?
A.
B.
C.
D.
1.4
What is the opportunity cost to an unemployed worker who becomes employed?
A.
B.
C.
D.
1.5
Capital exists only in capitalist market economies.
Capital results from the operation of the other factors.
The rewards earned by the owners of capital are uncertain.
Unlike labour or land, capital must be owned rather than hired or rented.
What is likely to be greater in a planned economy than a market economy?
A.
B.
C.
D.
1.7
The leisure they would otherwise have had.
The value of the goods and services they produce.
The wages they are paid.
Zero.
What distinguishes capital from other factors of production?
A.
B.
C.
D.
1.6
A normative approach is being adopted.
The effect of a change of one variable is being considered in isolation.
One good has to be sacrificed to obtain more of another.
One factor of production is fixed.
Efficiency.
Flexibility.
Innovation.
Stability.
Which is a normative statement?
A. An increase in the rate of inflation will lead inevitably to an increase in
unemployment.
B. A reduction in unemployment below a certain level will lead to higher inflation.
C. Inflation can be reduced only by increasing the level of unemployment.
D. Unemployment is more harmful than inflation.
1.8
The model which economists use to represent the movement of factors of
production and of income in an economy is known as the...
A.
B.
C.
D.
1.9
business cycle.
monetary flow.
circular flow.
economic cash.
This is the imaginary place where the owners of the factors of production meet the
people who want to buy them is known as the...
A.
B.
C.
D.
production market.
goods market.
money market.
factor market.
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1.10 What is consistent with an individual demand curve that slopes down from left to
right?
A.
B.
C.
D.
As price falls, a person switches away from rival products towards the product.
As price falls, a person’s willingness and ability to buy the product will decline.
As price rises, a person becomes less sensitive to price changes.
As price rises, a person’s opportunity cost of purchasing the product falls.
1.11 The points in the scatter diagram indicate the prices and quantities sold of an
agricultural commodity in different time periods.
It may be concluded that these points were generated primarily by changes over
time in
A.
B.
C.
D.
advertising.
consumers’ incomes.
supply.
the price of a substitute commodity.
1.12 The table shows the market supply for a raw material and the individual demand of
the three firms, X, Y and Z, which are its only buyers.
What is the equilibrium market price of the raw material?
A. $7
B. $8
C. $9
D. $10
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1.13 The diagram shows an initial equilibrium point (X) in a market and a new equilibrium
point (Y).
Which combination of changes in demand and supply could have caused the
movement from X to Y?
A
B
C
D
demand
decrease
decrease
increase
increase
supply
decrease
increase
decrease
increase
1.14 The market demand equation for a good is given by Qd = 310 - 20p and the supply
equation by Qs = 10 + 10p, where p denotes the price of the good.
What is the equilibrium price?
A.
B.
C.
D.
5
10
15
20
1.15 Wet weather in 2009 led to a fall in the sales of summer clothes. To support
businesses the government reduced the sales tax (VAT).
How would these events be shown on a demand and supply diagram for summer
clothes?
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1.16 A government gives farmers a subsidy of $5 per kilo to supply food on the open
market where X is the equilibrium position.
The effect is illustrated in the diagram below.
What will be the new equilibrium price and quantity supplied as a result of the
subsidy?
1.17 Which area in the diagram represents the amount of consumer surplus that would
occur in a market if a government enforced an effective maximum price?
A.
B.
C.
D.
f only
f + g + h only
f + g + i only
f+g+h+i+j+k
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1.18 If the price of bus rides is currently R3.50 per ride, then
S
Price
R3.50
R2.00
D
0
A.
B.
C.
D.
100
120
150
Quantity of bus rides/week
there will be a surplus of 30.
there will be a shortage of 50.
there will be a surplus of 50.
there will be a shortage of 30.
1.19 What must a government do to stabilise the price of an agricultural commodity?
1.20 The greatest single event in the history of the South African economy was the
discovery of...
A.
B.
C.
D.
diamonds
platinum
gold
silver
20 x 2 = (40)
TOTAL SECTION A: [40]
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SECTION B: DATA RESPONSE
START EACH SECTION ON A NEW SHEET OF PAPER.
QUESTION 2
The United States Postal Service is in trouble
Since 2006, the volume of mail carried by the United States Postal Service (USPS) has fallen considerably
and as a result it has reduced the number of its employees.
Table 1: USPS Volume of mail and number of employees in 2006 and 2010
One reason for the problems of the USPS has been the recession. This has prompted businesses and
advertisers, which account for most of the USPS’s income, to reduce the number of letters and parcels they
send. A long-term problem is that the volume of mail is not likely to go back to pre-2006 figures as the
economy improves because of the strong challenge from the internet. E-mail is fast and cheap, businesses
are advertising online more and they are increasingly asking customers to pay their bills online.
All of these issues are making it very difficult for the USPS, which does not receive any government
subsidies. It estimated that it would lose US$8 billion in 2010.
The USPS plans to increase revenue by charging more for its services and to cut its costs by stopping
Saturday deliveries and collections. Many USPS customers, including firms that use this service, are
opposed to the plan. Some firms, however, stand to gain from this plan. One firm, Pitney Bowes, for
example, makes products used by the USPS, such as automated sorting machines and automated franking
machines. It expects demand for these products to rise if the USPS seeks to replace some of its employees
with capital equipment.
2.1
2.2
2.3
2.4
2.5
Did the number of employees of the USPS fall by a smaller or greater percentage
than the volume of mail between 2006 and 2010? Show your workings.
(4)
Explain what is meant by a substitute and give two examples from the extract. (6)
Explain two reasons why a firm may seek to replace some of its employees with
capital equipment.
(8)
It is stated that the USPS plans to charge more for its services. Explain why such a
decision might not necessarily lead to an increase in revenue.
(8)
Discuss, with the aid of a diagram, whether it would be a good idea for a business,
such as the USPS, to be supported by a government subsidy.
(14)
TOTAL SECTION B: [40]
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SECTION C
ANSWER ONE QUESTION FROM THIS SECTION.
START EACH SECTION ON A NEW SHEET OF PAPER.
QUESTION 3
3.1
3.2
Using a normal demand curve explain how consumer surplus occurs.
(16)
With the help of diagrams, discuss whether consumers will benefit from the
introduction on a product of (i) an indirect tax, and (ii) an effective minimum price.
(24)
OR
QUESTION 4
4.1
4.2
Explain, with the help of a production possibility diagram, how the opportunity cost
of producing different combinations of goods can be measured.
(16)
Discuss the ease with which a planned economy may be changed into a market
economy.
(24)
OR
QUESTION 5
5.1
5.2
Discuss why in many countries some services, such as education and healthcare,
are supplied both by the government and the private sector.
(16)
With the aid of a diagram, explain the difference between the Monetary Flow and
the Real Flow of goods and services in the South African economy. Make use of a
three sector model.
(24)
TOTAL SECTION C: [40]
GRAND TOTAL: [120]
Grade 10 Economics: June 2013
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Grade 10 Economics Exam
June 2013
ANSWER SHEET
NAME: _______________________________
TEACHER: OFH / MJW / WHS
1.
A
B
C
D
2.
A
B
C
D
3.
A
B
C
D
4.
A
B
C
D
5.
A
B
C
D
6.
A
B
C
D
7.
A
B
C
D
8.
A
B
C
D
9.
A
B
C
D
10.
A
B
C
D
11.
A
B
C
D
12.
A
B
C
D
13.
A
B
C
D
14.
A
B
C
D
15.
A
B
C
D
16.
A
B
C
D
17.
A
B
C
D
18.
A
B
C
D
19.
A
B
C
D
20.
A
B
C
D
[20 x 2 = 40]
Grade 10 Economics: June 2013
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