Economics Answers

What assumptions need to be taken into consideration when drawing a PPF curve?

Calculate net value added at factor cost of:
Purchase machinery: 100
Sales:200
Intermediate cost:90
Indirect tax:12
Change in stock:10
Excuse duty:6
Stock of raw material:5

Tom is a full-time lecturer at a private higher education institution and is considering a career in
carpentry. He wishes to pursue a career in carpentry (a childhood dream) which he has studied part-time
and is now equipped to take on clients. In his current position he earns a rate of R1000 per day and if he
were to pursue a career in carpentry he would earn R800 per day. Due to the flexibility of the
employment conditions at the higher education institution he works for, Tom can negotiate the number of
days he works at and will receive a rate of remuneration based on the number of days worked.

1.2 Discuss the underlying assumption of the shape of the above drawn diagram and comment on how
likely this could be true with respect the above scenario.

Construct a production possibility frontier to illustrate Tom’s earnings potential between the two
careers if initially he was not working as a carpenter, then he worked one week per month, then two,
then three and finally four weeks per month (assuming only four weeks in a month).

Tom is a full-time lecturer at a private higher education institution and is considering a career in
carpentry. He wishes to pursue a career in carpentry (a childhood dream) which he has studied part-time
and is now equipped to take on clients. In his current position he earns a rate of R1000 per day and if he
were to pursue a career in carpentry he would earn R800 per day. Due to the flexibility of the
employment conditions at the higher education institution he works for, Tom can negotiate the number of
days he works at and will receive a rate of remuneration based on the number of days worked.
Question 1
1.1 Construct a production possibility frontier to illustrate Tom’s earnings potential between the two
careers if initially he was not working as a carpenter, then he worked one week per month, then two,
then three and finally four weeks per month (assuming only four weeks in a month).

Suppose you are the manager of a soccer stadium where all the tickets always have to be sold at the same price. Two matches are scheduled to be played during the next fortnight, the first between Sundowns and Pirates and the second between two first Division sides.(USE ARC PRICE ELASTICITY)
(a) Market research indicates that you can sell 40 00 tickets for the Sundowns-Pirates clash at R10 each, or 30 000 tickets at R20 each, Which option would you choose ? What is the price Elasticity of the demand for tickets for this particular game ?
(b)Likewise, market research indicates that you can sell 15 000 tickets for the first Division fixture at R10 each, or 5 000 tickets at R20 each. Which option would you choose ?What is the price elasticity of the demand for the tickets for this game ?

Explain psychological law of consumption

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
Question 1. At the above short-run equilibrium level, the firm is …
1. making a profit of R1 000 000
2. making a loss of R1 000 000
3. making zero economic profit.

Question 2
Assuming all firms in the market are identical, how many firms are producing books?
1. 5 firms
2. 50 firms
3. 500 firms
4. Given the information provided, it cannot be determined.

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
Assuming all firms in the market are identical, how many firms are producing books?
1. 5 firms
2. 50 firms
3. 500 firms
4. Given the information provided, it cannot be determined.