SUGGESTED SOLUTIONS

CHAPTER
Introduction to
1 Microeconomics

Section A
  1 C 2 B 3 C 4 A 5 C
  6 D 7 D 8 A 9 C 10 C
11 A 12 C 13 D 14 C 15 C
16 A 17 A 18 B 19 B 20 D

Section B
1 (a) Micro (e) Micro
(b) Micro (f) Macro
(c) Macro (g) Macro
(d) Micro

2 (a) Positive (d) Normative

(b) Normative (e) Normative
(c) Positive

3 (a) (i) 2,000 kg of apples

(ii) 4,000 kg of mangoes
(b) Increasing (opportunity cost), because the production possibilities curve is concave.
(c) (i)
Apple

Mangoes
(ii)
Apple

Mangoes
 Suggested Solutions
2

(d) (i) The economy is operating at full employment and full production capacity (full
efficiency).
(ii) The amount of resources available is fixed.
(iii) The state of technology does not change throughout production.

4 (a)
Grapes (kg)

Apples (kg)
0 1 2 3 4 5
(b) 1.5 units of grapes (6.5 – 5.0 units)
(c) (i) Attainable; efficient
(ii) Attainable; inefficient
(iii) Unattainable
(d) Any 2 of the factors:
(i) Availability of new or improved technology
(ii) Economic growth
(iii) Increase in population

5 (a) PPC2
(b) PPC4
(c) PPC5
(d) PPC1
(e) PPC3