PMIC 2022 EXAM

Question 1
1.1 4 SECTION
1.11 A 1
1.2 1 1.12 3
1.3 2 1.13 2
1.4 2 1.14 4
1.5 4 1.15 2
1.6 3 1.16 3
1.7 3 1.17 3
1.8 1 1.18 1
1.9 3 1.19 4
1.10 2 1.20 3
 QUESTION 2

• 2.1 LU4 PG100 Maximum prices

• 2.2 LU3, PG88
• 2.3 Setting minimum price, subsidies, taxing certain goods
 QUESTION 3
• 3.1 LU5 PG120 one mark for identifying the determinant and
one mark for indicating how it can make the demand for the
good price elastic
• 3.2 As biltong is price elastic, producers can increase total
revenue by decreasing the price of biltong. The increase in qty
demanded will be greater than the decrease in price and
therefore total revenue will increase.
• 3.3 The cross elasticity of demand for biltong will be positive.
An increase in the price of protein shakes will lead to an
increase in the qty of biltong demanded as they are considered
substitutes.
 QUESTION 4

• 4.1
• A:50
• B:450
• C:475
• D:200
• E:50
• F:133.3
• 4.2 LU7, PG160
 QUESTION 5

• 5.1 This is a perfectly competitive market as can be

seen by the perfectly elastic demand curve
• 5.2 LU8, PG183
• 5.3 The firm is making an economic loss. This is
evident as the AR is lying below the AC curve.
This means that the firms revenue per unit of
output is not sufficient to cover the cost per unit.
 QUESTION 5 cont

• 5.4 At point E1, MR = MC. If this firm does produce its loss
or maximise its profits by producing the qty at E1
• 5.5 In the long run, some firms will exit the industry. This
will cause the market supply curve to shift to the left which in
turn will raise the eqm price of the good in the market. At a
higher price, firms remaining in the industry will earn normal
profits in the long run.
 QUESTION 6

• 6.1 LU10, PG231

5 marks for graph and 5 marks for explanation

• One mark for correctly labelled axes, 2 makrs for
correctly drawing and labelling the backward bending
supply curve, one mark for showing substitution effect
and one mark for indicating the income effect correctly.
• 6.2 LU10, PG236
• 6.3 LU10, PG238