Economics of Enterprise Answers

(d) Assume the two islands experience constant opportunity costs in the production of the two products. Draw a correctly labeled graph illustrating Zeetopia’s and Freshland’s production possibilities, showing coconuts on the horizontal axis and mangoes on the vertical axis. Plot the numerical values from the table above on your graph

1 Given a market demand curve is Qd = 200 – 2P and the equation for a market supply curve is Qs = 50 + 3P, calculate the market equilibrium price and quantity. (5)

Use a diagram to distinguish between the consumer surplus and the producer surplus. (5) 

A production possibility frontier shows: A. The maximum combination of inputs that can be used to produce output in a typical economy. B. The maximum revenue that can be generated from the sale of output produced by limited resources in an economy. C. The minimum quantities of commodities that can be produced from limited but fullyemployed resources in an economy. D. The maximum quantities of commodities that can be produced from limited but fullyemployed resources in an economy. E. The quantities of factors of production available to produce goods and services in an economy. 

Microeconomics is a branch of economics that studies A. The determination of national income. B. The behaviour of individual decision-making units in the economy. C. The impact of unemployment in South Africa. D. The effects and consequences of the aggregate behaviour of all decision-making units. E. Both B and D above

A basis for the systematic study of economics exists because A. resources are scarce in relation to material wants. B. governments interfere with the efficient allocation of scarce resources. C. individual economic actors cannot be relied upon to make rational economic decisions. D. resources are plentiful relative to wants, therefore an allocation problem arises. E. the market consistently fails to allocate resources efficiently, thereby establishing the need to study economics

. More of a commodity will be purchased at lower prices because

A. Consumers substitute this commodit6y for others whose price has not changed.

B. At lower prices, consumers can purchase more of this commodity with a given money income.

C. More consumers will buy the commodity at lower prices than at higher prices.

D. All of the above.

An increase in demand results in which of the following changes in the commodity’s equilibrium price and quantity? A. Price rises and quantity falls B. Price falls and quantity rises. C. Price and quantity both rise. D. Price and quantity both fall.

Which one of the following is the correct formula?

A. NDP = GDP + Depreciation

B. NI = NDP + NFI – IBT

C. PI = NI –Social Security contribution + Subsidy - Net Interest on Government Bond

D. DI = PI + Personal Taxes