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Tutorial 1

The document is a tutorial for EECF1614/EFEC2614 that includes multiple-choice questions and exercises related to economics concepts such as opportunity cost, production possibilities curves, and microeconomics. It covers scenarios involving the trade-offs between producing different goods and the implications of resource allocation. Additionally, it includes questions requiring graphical representation and calculations related to production possibilities.

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philaniekhum
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Download as DOCX, PDF, TXT or read online on Scribd
2 views

Tutorial 1

The document is a tutorial for EECF1614/EFEC2614 that includes multiple-choice questions and exercises related to economics concepts such as opportunity cost, production possibilities curves, and microeconomics. It covers scenarios involving the trade-offs between producing different goods and the implications of resource allocation. Additionally, it includes questions requiring graphical representation and calculations related to production possibilities.

Uploaded by

philaniekhum
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TUTORIAL 1 2025 for EECF1614/EFEC2614

Choose the correct option.

1.1 Mikki decides to work for five hours the night before her economics exam. She received a
payment of R75 for the work. However, her exam score of 65% in the economics exam was 10%
lower than it would have been had she stayed home and studied. Her opportunity cost for taking
up the work is the:
A. five hours she worked.
B. R75 she earned.
C. 10% she lost on her exam.
D. 75% that she could have scored.

1.2 Which of the following factors would shift the production-possibilities curve of South Africa
outwardly?
A. An increase in the level of unemployment.
B. An increase in the amount of resources allocated to the production of consumer goods.
C. The adoption of the efficient production techniques.
D. An increase in the number of skilled workers moving from South Africa to the United
Kingdom.

1.3 If a country is producing on its PPC, then


A. it cannot produce more of one good without producing less of the other
B. it is not using all of its available resources
C. it is impossible, as you can only produce within your PPC.
D. None of the above is true.

1.4 If a country is producing outside its PPC, then


A. it has unemployed resources
B. this is impossible since a country cannot produce beyond its PPC
C. it is at full employment
D. the country would soon run out of money as it is consuming more than it is producing.

1.5 The production possibilities curve shows:


A. the ideal, but unattainable, combinations of two goods that would maximize consumer
satisfactions.
B. the minimum outputs of two goods that will sustain a society.
C. the various combinations of two goods that can be produced when some resources are
unemployed.
D. the various combinations of two goods that can be produced when society uses its scarce
resources efficiently.

1.6 Which of the following would most likely shift the production possibilities curve (PPC) for a
nation outward?
A. A reduction in unemployment.
B. A reduction in discrimination.
C. An increase in the production of capital goods.
D. An increase in the production of consumer goods.

1.7 According to economists, human wants will never be fulfilled completely because,
A. people are greedy.
B. productive resources are scarce.
C. people are not capable of fully rational thought.
D. people's wants are manipulated by advertising.
TUTORIAL 1 2025 for EECF1614/EFEC2614

1.8 Microeconomics
A. is particularly subject to the "fallacy of composition".
B. is concerned with the economy as a whole.
C. studies how supply and demand determine prices in individual markets.
D. describes the aggregate flows of output and income.

1.9 A country can eventually shift its production possibilities curve outward by
A. reducing unemployment.
B. engaging in international trade.
C. running a trade deficit.
D. shifting resources from consumer goods to capital goods.

1.10 Opportunity cost is best defined as:


A. the monetary price of any productive resource.
B. the amount of labour that must be used to produce one unit of any product.
C. the ratio of the prices of imported to the price of exports.
D. the amount of one product that must be given up to produce one more unit of another
product.

QUESTION 2 [7]

Suppose shirts and food are the only two commodities produced (in thousands of tonnes) in the
economy. The production possibilities are presented in the table below:
Possibilities A B C D
Shirts 6 5 3 0
Food 0 1 2 3

2.1 Draw a graph to illustrate the economy’s Production Possibilities Curve (PPC). Plot shirts on the
y-axis. [3]
2.2 Suppose the prices of shirts and food are R10 and R3 respectively. In a table show the
opportunity cost, in monetary terms, associated with the production of each additional unit of
food. Name and briefly explain the trend that you observe. [6]
2.3 Why is the PPC curve balloon-like (concave to the origin) in shape? [2]
2.4 Calculate the opportunity cost of producing 2 units of food. [1]
2.5 What does a combination of 4 shirts and 1 unit of food represents? [1]
2.6 Consider the effect of technological breakthroughs in food production and explain how this
breakthrough alleviates scarcity. [2]
TUTORIAL 1 2025 for EECF1614/EFEC2614

QUESTION 3
Use the following table to answer the questions below:

Combinations of Production Possibility

Bicycles Combinations Computers

14 A 0

12 B 2

9 C 4

5 D 6

2 E 7

0 F 8

3.1 If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to
increase computer output to 6, the cost is?
3.2 If society is currently producing the combination of bicycles and computers shown by point D,
the production of 2 more units of bicycles will cost?
3.3 The movement down the production possibilities curve from point A to point F suggests that the
production of both bicycles and computers are subject to:

QUESTION 4

Use the following diagram to answer the questions below:

4.1 The slope of curve ZZ at point A is?


4.2 The slope of curve ZZ at point B is?
4.3 The slope of curve ZZ at point C is?



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