FINAL ONLINE SUMMATIVE ASSESSMENT

Bachelor of Public Administration

Bachelor of Business Administration

Bachelor of Commerce in Accounting

Bachelor of Commerce in Entrepreneurship

Bachelor of Commerce in Retail Management

Bachelor of Commerce in Financial Management

PROGRAMME
Bachelor of Commerce in Project Management

Bachelor of Commerce in Marketing Management

Bachelor of Commerce in International Business

Bachelor of Commerce in Supply Chain Management

Bachelor of Commerce in Human Resource Management

Bachelor of Commerce in Information and Technology Management

MODULE Microeconomic Essentials

YEAR One (1)
INTAKE July 2024 Semester 1
DATE 03 December 2024
TOTAL MARKS 100
SECTION A [100 MARKS]
Answer ALL the questions in this section.

Type ONLY the letter that represents the correct answer next to the corresponding number in your online answer
booklet. E.g. 26 B

QUESTION 1 (4 Marks)
Use the diagram below to answer the question that follows.

Which point on the graph best reflects inefficiency?

a) Point A
b) Point B
c) Point D
d) Point H

QUESTION 2 (4 Marks)
“Enter our competition and you could win your share of R500 online shopping voucher for yourself AND a R10
000 voucher towards a Women's empowerment NGO of your choice!”
Mrs Jacobs entered the competition above at Mr Price and won a R500 voucher. With R500, she can either
buy a handbag, a pair of shoes, a pair of jeans or jacket. She already has a jacket, and she does not want
new shoes. She would like a pair of jeans but decides to buy a handbag. What is her opportunity cost?
a) R500 voucher
b) Handbag
c) Pair of shoes
d) Pair of jeans
QUESTION 3 (4 Marks)
Use the diagram below, which indicates maximum combinations of good X and good Y that can be produced
with available resources, to answer the question.

On production possibility curve AC ...

a) Output combinations D and E represent full and efficient use of resources, but A, C and F represent inefficient
resource use.
b) Output combination D represents the most efficient use of resources.
c) Output combinations A, D, E and C all represent full and efficient resource use.
d) Output combination A and C represents less efficient resource use than either D or E.

QUESTION 4 (4 Marks)
Which of the following statements is/are CORRECT?
i. An increase in the price of kettles will result in an increase in the supply of kettles.
ii. An increase in the price of any of the factors of production will result in a leftward shift of the supply curve.
iii. An increase in the wages of workers at Mr Juicy drink factory in Durban will result in a movement along the
supply curve of Mr Juicy drinks, ceteris paribus.
iv. In their supply decisions, producers take account of the prices of all the alternative products they can
produce.

a) Only i, ii , iii and iv

b) Only ii and iv
c) Only ii and iii
d) Only i, ii and iv
QUESTION 5 (4 Marks)
Use the diagram below to answer the question that follows:

Assume that there is a shortage in the market. Which of the following best describes the consequent change in the price
in the market?
a) Price would increase from P2 to P1
b) Price would decrease from P1 to P2
c) Price would decrease from P2 to P3
d) Price would increase from P3 to P2

QUESTION 6 (4 Marks)
Use the diagram to answer the question below.

There has been an increase in the price of printer ink cartridges. How would the described scenario likely
impact the demand curve for printers?
a) There is a movement along the demand curve from point G to point E
b) There is a movement along the demand curve from point E to point G
c) The demand curve shifts from D to D’
d) The demand curve shifts from D’ to D
QUESTION 7 (4 Marks)
The Figure below illustrates a linear demand curve.

By comparing the price elasticity in the R2 to R4 price range with the elasticity in the R8 to R10 range, you
can conclude that the elasticity is ...
a) greater in the R8 to R10 range.
b) greater in the R2 to R4 range.
c) the same in both price ranges.
d) greater in the R8 to R10 range when the price rises, but greater in the R2 to R4 range when the price
falls.

QUESTION 8 (4 Marks)
Consumer demand for meat has continued to rise throughout the pandemic, despite higher prices, according
to a recent analysis from CoBank. Beef consumption has grown 1.4% from 2019 to 2021 even as combined
retail prices increased by more than 20%, the report found. And for chicken, both consumption and prices hit
record-high levels in 2021. But as beef prices continue to increase, consumers may begin to “trade down”
when deciding which protein to purchase, CoBank said, with chicken most likely to benefit. The USDA is
expecting a slight decline in beef consumption in 2022-23 as domestic supplies fall with shrinking cattle
herds and growing exports, CoBank noted”.

Source: recent analysis from CoBank

If the quantity demanded of chicken increases by 5% when the price of beef increases by 20%, the cross
elasticity of demand between chicken and beef is ...
a) 2.5
b) -4
c) 4
d) 0.25
QUESTION 9 (4 Marks)
As the economy picks up, demand for many inputs is outstripping supply, driving up prices for things as
diverse as construction materials, energy, food ingredients, and semiconductors. Soon, that list will include
Office 365 subscriptions.
You might not have heard about it from your sales rep yet, but Microsoft quietly announced that starting
March 1, 2022, it will hike the price of many of its enterprise Office 365 and Microsoft 365 subscriptions.
(Consumer and education subscription prices aren’t changing — for now.)”

Source: https://www.cio.com/article/3634389/microsofts-office-365-price-increases-how-to-reduce-the-hit.html

An increase in the price of Office 365 subscriptions above the equilibrium will…
a) Shift the Office 365 subscriptions’ supply curve to the right
b) Shift the Office 365 subscriptions’ demand curve to the right
c) Cause a surplus of Office 365 subscriptions
d) Cause a shortage of Office 365 subscriptions

QUESTION 10 (4 Marks)
Given that A and B are complements, which one of the following statements is incorrect?

a) An increase in the price of A will result in a decrease in the quantity demanded of A and will therefore
also lead to a reduction in the demand for B.
b) An increase in the price of A will eventually tend to lead to a decrease in the price of B, once all the
interactions have been taken into account.
c) An increase in the price of A can be illustrated by a shift of the demand curve for A.
d) A decrease in the price of A will eventually tend to lead to an increase in the price of B, once all the
interactions have been taken into account.
QUESTION 11 (4 Marks)
Use the diagram below to answer the question below:

Assuming that the curves above are representative of an inferior good, which of the following could explain a
movement from point p1q2 to point p1q1 in the figure?

a) an increase in the price of a complement

b) an increase in buyers’ income
c) a decrease in the buyers’ income
d) an increase in the price of the good
QUESTION 12 (4 Marks)
“Industry organization Agri SA has expressed concern about rising input costs in the agricultural sector,
echoing concerns raised by the Agricultural Business Chamber (Agbiz) earlier this week. Agri SA says the
cost of direct materials, labour and other overheads are particularly worrying, while Agbiz mentioned how fuel
costs are gnawing at agribusiness’ profitability”.

Sunshine markets is producing and selling sweet potatoes and they have been impacted by the rising costs.

If sweet potatoes and potatoes are substitute products, which diagram above illustrates the effect on the
sweet potato market of a decrease in the price of potatoes?
a) A
b) B
c) C
d) D

QUESTION 13 (4 Marks)
Fuel prices are increasing in South Africa in November 2022 with diesel prices showing the largest increases.
See the details below…
The following fuel price increases will take effect on Wednesday 2 November 2022.
· Petrol (both 93 and 95 grades) will increase by 51 cents per litre.
· Diesel 0.05% Sulphur will increase by 86 cents per litre.
Source: https://www.cars.co.za/motoring-news/fuel-price-increases-for-november-2022/136357/

Shortly after the news that the petrol price will increase at midnight, there were long queues at the petrol
pumps. Which of the following is TRUE?
a) The quantity of petrol demanded increased because people’s price expectations where influenced.
b) The demand for petrol increased because the supply of petrol decreased.
c)The quantity of petrol demanded increased because people’s consumer preferences changed.
d) The demand for petrol increased because people expected the price to increase in the future.
QUESTION 14 (4 Marks)
Refer to the figure below to answer the question.

In the given figure, an increase in the supply of oil would result in a movement from ...
a) point a to point d
b) point a to point e
c) point a to point b
d) point a to point c

QUESTION 15 (4 Marks)
Us the figure below to answer the question that follows.

Which one of the following statements is CORRECT?

a) Flows (2) and (3) represent income.
b) Flows (2) and (4) represent spending.
c) Flows (1) and (2) represent spending.
d) Flows (1) and (3) represent spending.
QUESTION 16 (4 Marks)
The diagram below shows the equilibrium position of Balloon manufacturers who are operating under pure
competition because one company does not have an edge over another.

The maximum economic profit (or minimum economic loss) for the firm in the diagram above would be a ...

a) loss of R540
b) loss of R480
c) loss of R60
d) loss of R490

QUESTION 17 (4 Marks)
Assuming that the apple farmer could earn $2, 000 as an employee elsewhere, then the total economic profit
in Table 17.1 is…
Table 17.1

a) -$75
b) $925
c) -$2, 000
d) -$1 075
QUESTION 18 (4 Marks)
Study the following diagram and answer the questions:

What is the total revenue at the profit maximisation point?

a) R1 200
b) R1 320
c) R1 000
d) R1 100

QUESTION 19 (4 Marks)
The following diagram indicates the market supply for ice cream and the producer surplus at a market price of
R15.

Which of the following statements is incorrect?

a) If the market price increases from R15 to R20, the producer surplus will increase, since producers are
selling more ice cream and receiving a higher price for it.
b) The producer surplus at R20 is the area 0-20-M, as indicated in the diagram.
c) The change in the producer surplus if the price increases from R10 to R20 is represented by the area 15-
20-M-L, as indicated in the diagram above.
d) The producer surplus can be defined as the difference between the price the producer is willing to accept
and the price the consumer is actually paying.
QUESTION 20 (4 Marks)
Sarah owns the only bakery in a small town, and she specializes in a unique type of pastry that has gained
immense popularity. Due to high demand and limited competition, Sarah has a virtual monopoly on this
pastry. As a result, she can set the price at a level that maximizes her profits. Sarah is currently the sole
provider of this pastry in the town, giving her significant market power in the short run.
The Figure below relates to the short-run monopoly equilibrium of Sarah’s bakery. Use the figure to answer
the question.

The monopolist profit per unit is equal to

a) R100
b) R250
c) R280
d) R460
QUESTION 21 (4 Marks)
You have been provided with the following information for a farm producing potatoes in the short run. The
output is measured in the number of potatoes produced per hour. Complete the average product and
marginal product columns.

Capital Labour TP AP MP
2 0 0 - -
2 1 4 4.00 4
2 2 10
2 3 17
2 4 25
2 5 32
2 6 38
2 7 42 6.00 4
2 8 44
2 9 44
2 10 43 4.30 -1

At which point does the law of diminishing returns set in?

a) fourth unit of labour
b) fifth unit of labour
c) sixth unit of labour
d) seventh unit of labour
QUESTION 22 (4 Marks)
The following table represents the short-run total cost schedule of a mineral water manufacturer. Study the
following table, and then answer the question.

Labour Output (bottles of mineral water Total cost (R)

per day)
(workers per day)

0 0 400

1 30 700

2 80 1 000

3 120 1 300

4 140 1 600

5 150 1 900

When output increases from 30 to 80 bottles of mineral water, the marginal cost of producing one of those 50
bottles of mineral water is ...
a) R5
b) R6
c) R12,50
d) R20
QUESTION 23 (4 Marks)
The figure below shows the price, marginal cost, and average cost curves facing a perfectly competitive firm
in the short run.

Total costs to the profit-maximising firm in the short run are:

a) R960
b) R1 200
c) greater than R1 200
d) R720

QUESTION 24 (4 Marks)
In an oligopolistic market characterized by a demand curve as given in the diagram below, if one firm
decreases its price:

a) Competing firms will likely match the price decrease to maintain market share.
b) Competing firms will increase their prices to maximize profits.
c) Competing firms will likely maintain their prices, leading to a decrease in the firm's market share.
d) Competing firms will exit the market to avoid price competition.
QUESTION 25 (4 Marks)
Use the following diagram in which the monopoly depicted is maximising profit and answer the question
below.

What is the total profit?

a) R3
b) R4
c) R6
d) R9

END OF PAPER