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Suppose that the price of commodity Y is $ 20 per unit while the price of commodity X is $ 15
per unit and suppose that an individual’s money income is $ 100 per period and is all spent on X & Y.
i. Draw the budget constraint line for this consumer at the initial point.
Based on your review of the experience of other nations and literature arrive at a conclusion on if the public sector wage bill can be effective expenditure control measure
A brief explanation of the public wage bill in South Africa?
Why is Eskom SOC Ltd a monopoly and why is it inefficient?
Answer true or false
An increase in demand is reflected as a rightward (outward) shift of the demand curve and is caused by an increase in PRICE?
- The following data of a firms demand for production is given for the period 2011-2015. By using the least square method find out the demand for firm’s production for the year 2016, 2017, 2018 and 2019.
Demand (mln tns) Year
22 2011
25 2012
36 2013
42 2014
58 2015
- Fixed Cost is 100, calculate TC, AC, MC, AFC and AVC
Qty. TVC
1. 500
2 600
3 850
4 980
5 1020
Q.2.1 Explain the impact of each of the following scenarios on ONLY the market for plain, bottled water in Gauteng. • State whether each of the following scenarios will impact the demand or the supply curves for plain, bottled water. • State whether the impact will shift the curve or cause a movement along the curve. • If it is a shift, state the direction of the shift and motivate your answer.
Q.2.1.1 Drinking bottled water is considered healthy, ceteris paribus.
Q.2.1.2 The number of firms selling bottled water in Gauteng has increased.
Q.2.1.3 The price of bottled Vitamin water (a substitute in consumption) has decreased.
Q.2.1.4 The price of plastic bottles has increased, ceteris paribus.
Q.2.1.5 Household incomes have decreased.
Perfect competition is a theoretical market structure in which the following criteria are met: All firms sell an identical product. All firms are price takers. Market share has no influence on prices. Given the characteristics described above
i. Describe the factors that drive profits to zero in perfectly competitive markets in the long run. Explain carefully the incentives that drive the market to a long run equilibrium. AP,3 Marks
ii. Why would a firm choose to operate at a loss in the short run? Explain carefully. AP,3 Marks
iii. When do firms decide to shut down production in the short run? Explain carefully.
a) A monopoly market is characterized by the profit maximizer, price maker, high barriers to entry, single seller, and price discrimination. The information on the table below is a typical monopoly firm. Use it to answer the questions that follow
Output
Price
Total cost
$100
$200
1
100
290
2
100
350
3
100
390
4
100
470
5
100
560
6
100
700
7
100
900
i. What is the profit maximizing or loss minimizing quantity of output of this firm to produce? Why? 2marks
ii. What is the profit or loss at the profit maximizing or loss minimizing output level? 2marks
iii. Should the firm shut down or remain in operation? Why? 2marks
iv. Assuming this is a representative firm in the industry or market, given the profits or losses incurred, what can be expected to happen over time in the market? 2marks
