2013 ST2.pdf - FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES...

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1 FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES DEPARTMENT OF ECONOMICS ECONOMICS 110 SEMESTER TEST 2 03 May 2013 Total: 50 marks Time: 90 minutes Examiners: Mr J van Rensburg Prof M Breitenbach Mr FJ Scholtz Mr G Kashalala Mr C Mwabutwa Mr L Stander Mrs S Kilambo External Examiner: Dr R Inglesi-Lotz ANSWER ALL THE QUESTIONS. PLEASE USE SIDE 1 OF THE ANSWER SHEET HANDED TO YOU TO RECORD YOUR ANSWERS TO SECTION A. ENSURE THAT YOU USE THE CORRECT PROCEDURES TO COMPLETE THE ANSWER FORM AS CLEARLY ILLUSTRATED ON THE FORM. USE THE ANSWER BOOK TO ANSWER SECTION B. SECTION A: MULTIPLE CHOICE QUESTIONS [Total: 25] A1. If the total cost is R1000 and the average fixed cost is R15 when 20 units of output are produced, then the average variable cost at this level of output is: a. R30 b. R35 c. R45 d. Impossible to determine with the information available. A2. When the marginal product (MP) reaches its maximum, then the total product (TP): a. Is at its maximum too. b. Starts to decline even if MP is positive. c. Is increasing until MP becomes negative. d. Is decreasing only where MP becomes positive. A3. Alice consumes additional units of yoghurt that each yields less satisfaction than the previous one. This is an example of: a. The law of demand. b. Decreasing economies of scale. c. The law of diminishing marginal utility. d. Increasing opportunity cost.
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2 A4. The first Pepsi yields Craig 18 units of utility and the second an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is: a. 26 units of utility. b. 6 units of utility. c. 8 units of utility. d. 38 units of utility. A5. The market price of a game of golf is R150 and that of a concert ticket R180. Assuming that your time is worth R60 an hour and that a game of golf takes you 4 hours to complete but a concert only lasts 2 hours. Also assuming that the marginal utilities of successive units of concerts and games of golf provides you with the same level of marginal utility, being rational you would be inclined to: a. Consume more concerts than games of golf. b. Consume more of both concerts and games of golf in equal increments. c. Consume more games of golf than concerts. d. Consume fewer concerts and less games of golf in equal proportions. A6. A typical indifference curve shows: a. That a consumer is less willing to exchange one unit of good A for one unit of good B. b. All combinations of goods that give a consumer the same level of utility. c. All the different incomes of a consumer. d. That a producer can produce two types of good only. A7. If the price elasticity of demand is 0.5 and the demand curve is linear, a company wanting to increase its total revenue (TR) should: a. Increase the price of the product. b. Decrease the price of the product.
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