2012 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 23 April 2012 Total: 50 marks Time: 90 minutes Examiners: Mr J van Rensburg Dr R Inglesi-Lotz Mr FJ Scholtz Mr M Seleteng Mr G Kashalala Mr C Mwabutwa Mr L Stander Mr S Jibao Mr R de Lange External Examiner: Prof R van Eyden 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] Question 1 1.1 The four main factors of production are: A) Land, labour, capital and money. B) Land, labour, capital and entrepreneurial ability. C) Labour, capital, technology and entrepreneurial ability. D) Labour, capital, entrepreneurial ability and money. 1.2 In the market presented in the table below, economists would call a government-set minimum price of R50 a: Quantity demanded Price Quantity supplied 52 50 73 62 45 62 72 40 51 82 35 42 92 30 33 A) price ceiling. B) price floor. C) equilibrium price. D) fair price. 1.3 Which of the following is not a common feature of market systems? A) Labour specialization. B) Use of advanced technology. C) Extensive use of capital goods. D) Public ownership of all the resources.
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2 1.4 Refer to the graphs below. A price increase from R20 to R40 causes quantity demanded to decrease from 100 units to 50 units. Which graph best illustrates the price elasticity of demand for this good? A) Graph A B) Graph B C) Graph C D) Graph D 1.5 According to utility theory, when total utility reaches a maximum, then marginal utility is: A) increasing. B) decreasing. C) at a minimum. D) equal to zero. 1.6 In comparing the changes in TVC and TC associated with an additional unit of output, we find that: A) no generalization about the changes in TC and TVC can be made. B) the changes in TC and TVC are equal. C) the change in TC is greater than the change in TVC. D) the change in TVC is greater than the change in TC. 1.7 The economizing problem for society is: A) to achieve a more equitable distribution of income in society. B) that productive resources are scarce relative to economic wants. C) to establish prices which are fair for both producers and consumers. D) that product prices rise more rapidly than incomes of consumers. 1.8 In the graph below, under a legal price ceiling of X, the price and quantity traded would be: A) price X and quantity C. B) price X and quantity B. C) price Y and quantity A. D) price X and quantity A.
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3 1.9 Refer to the data below. Diminishing marginal returns become evident with the addition of the: A) sixth worker. B) fourth worker. C) third worker. D) second worker. 1.10 The marginal rate of substitution measures: A) the magnitude of the substitution effect.
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