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(a) Briefly describe how governments are involved in creating monopolies. [10] (b) Eskom is a well-known government created monopoly in South Africa. Briefly explain how Eskom as a monopoly has impacted on the South African economy, since 2009.
According to the theory of the labour market the market mechanisms of supply and demand will naturally move towards equilibrium, where unemployment will be at its natural rate. However for more than 25 years South Africa’s unemployment rates have been among the highest in the world. Using your knowledge of the South African labour market as well as the theory of the firm examine why South Africa is faced with such high levels of unemployment.
Discuss the policy and funding issues underlying food assistance programs in the U.S. (2). Should the program be more of a nutrition program or serve as an income maintenance benefit? (3). Should the program limit food choices? If so why and to what extent? (4) What responsibilities, if any, should participants of the program be expected to meet?
Use a numerical example to explain the difference between the rate of change and the level of change between two values.
Indicate whether each of the following statements is True or False. In each case give a brief explanation for your choice. I
1-Countries like Finland and Norway are unlikely to suffer from the scarcity problem as defined in economic theory.
2-A new highway between Port Elizabeth and East London is a good example of a consumer good.
3-In the economic circular flow model, capital formation is a flow that is mainly linked to firms.
4-The quantity of a good demanded can be indicated as Qd = f(Px) ceteris paribus.
How would you differentiate between Law of Returns to a Factor and Law of Returns to Scale? How would you show your understanding about the reasons of the application of these two laws?
Discuss the policy and findings issues underlying food assistance programs in the U.S. Should the program be more of a nutrition program or serve as an income maintenance benefit? Why? Should the program limit food choices? If so, why, and to what extent? What responsibilities, if any, should participants of the program be expected to meet?
What are the reasons for and against treating agriculture differently from a legal and policy standpoint? Should agriculture be exempted from environmental, labor and antitrust laws.?
Assume labor (L) is the only variable input used in the production process, a firm’s production
function is given by 2 3 Q 7L 10 L L where Q represents total product.
Classify the production function in to the three stages of production.
Two students are preparing for their micro exam, but they seem confused: Student A: ‘‘we learned
that demand curves always slope downward. In the case of a competitive firm, this downward sloping
demand curve is also the firm’s marginal revenue curve. So that is why marginal revenue is equal to
price.’’ Student B: ‘‘I think you have it wrong. The demand curve facing a competitive firm is
horizontal. The marginal revenue curve is also horizontal, but it lies below the demand curve. So
marginal revenue is less than price.’’ Can you clear up this drivel? Explain why neither student is
likely to warrant a grade commensurate with his or her name.
