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MODULE NAME: MODULE CODE:

INTRODUCTION TO MICRO AND MACROECONOMICS IMME5112/d
INTRODUCTION TO ECONOMICS IECO5112/d

ASSESSMENT TYPE: TEST (PAPER ONLY)

TOTAL MARK ALLOCATION: 60 MARKS
TOTAL HOURS: 1 HOUR (+5 minutes reading time)
INSTRUCTIONS:
1. Please adhere to all instructions in the assessment booklet.
2. Independent work is required.
3. Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4. You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5. Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6. Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7. Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1. This is a CLOSED BOOK assessment.
2. Calculators are allowed.
3. For multiple-choice questions, give only one (1) response per question. The marker will
ignore any question with more than one answer, unless otherwise stated. You should,
therefore, be sure of your answer before committing it to paper.
4. Answer All Questions. .

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Question 1 (Marks: 10)

Multiple-choice questions: Select one correct answer for each of the following. In your answer
booklet, write down only the number of the question and next to it, the letter of the correct
answer

Q.1.1 The degree to which consumption of goods and services is derived is referred to (2)
as?

a) Marginal utility.
b) Ordinal utility.
c) Utility.
d) Average utility.

Q.1.2 Which of the following correctly defines marginal utility? (2)

a) Marginal utility measures the consumer’s overall level of satisfaction

derived from consumption activities.
b) Marginal utility measures the added satisfaction derived from a one-unit
increase in consumption of particular good or service, holding
consumption of other goods and services constant.
c) Marginal utility measures the consumer’s overall level of satisfaction
derived from consumption activities.
d) Marginal utility states that as an individual increases consumption of a
given product within a set period of time, the marginal utility gained from
consumption eventually declines.

Q.1.3 Which is the most accurate statement about the CPI? (2)

a) The CPI has nothing to do with the average family’s standard of living.
b) When the CPI increases, the standard of living of the average family
increases.
c) When the CPI increases, the average family has to spend more to maintain
its standard of living.

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d) When the CPI increases, the average family has to spend less to maintain
its standard of living.

Q.1.4 Nominal GDP measures the value of goods and services in ______________? (2)

a) Normal terms.
b) Real terms.
c) Nominal terms.
d) Real price terms.

Q.1.5 If an increase in number of workers leads to all workers becoming less (2)
productive, this situation is called:

a) Lessing production.
b) increasing marginal product.
c) diminishing marginal product.
d) diminishing profitability.

Question 2 (Marks: 10)

Consider the concept statements below, indicate whether the statements are True or False.

Q.2.1 One of the differences between labour market and the goods market, is that (2)
labour is transferable.

Q.2.2 Good market consists of workers with a common set of skills who are joined (2)
together in a common association, irrespective of where, or for whom, they
work.

Q.2.3 There is government intervention in an imperfect competitive labour market and (2)
one example is the use of a minimum wage.

Q.2.4 The Producer Price Index (PPI) represents the cost of the shopping basket of (2)
goods and services of a typical South African House.

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Q.2.5 GNP measures the value of production by the Citizens of a country during a (2)
specified time.

Question 3 (Marks: 10)

Describe each of the following terms.

Q.3.1 Total utility (2)

Q.3.2 Nominal wage (2)

Q.3.3 GNI (2)

Q.3.4 CPI (2)

Q.3.5 Lorenz curve (2)

Question 4 (Marks: 20)

Q.4.1 Distinguish between the Perfect labour market and the Imperfect labour market. (6)

Q.4.2 Identify four factors of production of the economy. (4)

Q.4.3 Draw and explain a graph that shows the general equilibrium position in a (10)
perfectly competitive labour market.

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Question 5 (Marks: 10)

The table below relates to profit maximisation in a perfectly competitive labour market.
You do not have to copy the table into your answer booklet. Only write the letter and your
answer.

Number of apples consumed Marginal utility(utils) Total utility(utils)

1 50 A?
2 B? 85
3 29 C?
4 D? 132
5 12 E?

END OF PAPER

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