ECS1500 Assignment 1 Semester 2 2023 (ANSWERS)

ECS1500 Assignment 1 Semester 2 2023 (ANSWERS) Question 1 Incorrect Mark 0.00 out of 2.00 Flag question Question text The service of an information technology specialist will form part of the production factor, capital. Select one: a. True b. False Feedback Your answer is incorrect. The service of an information technology specialist will form part of the production factor, labour. This entails the use of the abilities and talents of a person who will be paid a wage or salary or contract fee for his/her services. The correct answer is: False Question 2 Incorrect Mark 0.00 out of 2.00 Flag question Question text The question is based on the following diagram: In the circular flow model of the economy, with a household sector and a business enterprise sector, the role(s) of the market for factors of production is/are _____________. [1] to determine the prices of goods and services [2] to determine the remuneration of factors of production [3] to determine how households will determine which goods and services to buy [4] to determine how factors of production will be allocated to supply the different goods and services Select one: a. only statements 1 and 2 are correct b. only statement 2 is correct c. All the statements are correct d. only statements 1 and 3 are correct e. only statements 2 and 4 are correct Feedback Your answer is not corret. Households will supply the factors of production in the market for factors of production, while the business enterprises will form the demand for these factors of production in order to be able to produce and supply goods and service. Therefore, the remuneration of factors of production will be determined in the market for factors of production, and this will then also determine which business enterprises will hire and buy the different factors of production, that is, how the factors of production will be allocated to supply different goods and services. Therefore, statements [2] and [4] are correct. The prices of goods and services, and how households allocate their income and wealth to buy goods and services, will be determined in the market for goods and services. Therefore [1] and [3] are not correct options. The correct answer is: only statements 2 and 4 are correct Question 3 Incorrect Mark 0.00 out of 2.00 Flag question Question text Within a command economy _____________. Select one or more: a. there is significant room for competition b. there is room for individual decision making c. resources are owned by the wealthy d. we find centralisation of economic power Feedback Your answer is incorrect. In the command economy (also known as the centrally planned economy), decisions about what, how and for whom to produce are taken by the central authority implying the centralisation of economic power. In a market economy, in contrast, economic power is dispersed. In other words, the ownership of resources determines the economic power of every individual. In the market economic system, economic resources are privately owned and therefore each individual can decide what to do with the resources. This means that there is room for individual decision making. However, this is not true in a command economy, as the resources will belong to the community as a whole and will not be owned by any one individual. In the command economy resources belong to the community as a whole and will not be owned by any one individual. This means that there should not be wealthy or less wealthy persons, but that all share equally in what is available. In the command economy, the centralisation of economic power does not allow competition because the central authority is the sole decision-maker. The correct answer is: we find centralisation of economic power Question 4 Not answered Marked out of 2.00 Flag question Question text The following simplified circular flow shown in Figure 1.1 in the study guide can be used to analyse the government's role in the economy. Circular flow diagram Select one: a. True b. False Feedback Your answer is not correct. The simple circular flow diagram includes only firms and households, and excludes the government. Therefore, this statement is false. The correct answer is: False Question 5 Correct Mark 2.00 out of 2.00 Flag question Question text If variables x and y move up and down together, they are positively related. Select one: True False Feedback Your answer is correct. Well done! Two variables change in the same direction, we say that they are positively related. If we illustrate this relationship with a graph, the curve will also have a positive slope. If two variables change in opposite directions, we can say that they are negatively related. The curve that illustrates this relationship will have a negative slope. The correct answer is 'True'. Question 6 Correct Mark 2.00 out of 2.00 Flag question Question text Use the following graph to answer the question: Diagram price and quantity of widgets Which of the following statements are correct? a. At a price of $3, the quantity of widgets demanded exceeds the quantity of widgets supplied. b. The quantity supplied at point C is greater than the quantity demanded at point C. c. At a price of $3, the quantity of widgets demanded is equal to the quantity of widgets supplied. d. The quantity supplied at point C is less than the quantity demanded at point C. Feedback Your answer is correct. At point C the quantity supplied is equal to 4, while the quantity demanded is also equal to 4. At point C the quantity of widgets demanded is therefore equal to the quantity supplied. At point C the price of widgets is equal to $3 and this is therefore the point at which the quantity of widgets demanded is equal to the quantity of widgets supplied. Therefore there is no excess demand or supply at a price of $3. The correct answer is: At a price of $3, the quantity of widgets demanded is equal to the quantity of widgets supplied. Question 7 Correct Mark 2.00 out of 2.00 Flag question Question text The slope of a straight line is calculated by dividing the change in the value of the variable measured on the horizontal axis by the change in the value of the variable measured on the vertical axis. Select one: True False Feedback Your answer is correct. Well done! The slope of a straight line is calculated by dividing the change in the value of the variable measured on the vertical axis by the change in the value of the variable measured on the horizontal axis. The correct answer is 'False'. Question 8 Incorrect Mark 0.00 out of 2.00 Flag question Question text Scarcity implies that participants in the economy have to _____________. Select one: a. trade b. make choices c. cooperate d. compete Feedback Your answer is not correct. Scarcity implies that all the needs and wants of all the participants in the economy cannot be met. Economics has to do with the way in which the limited or scarce resources will be allocated. Since all the needs and wants cannot be satisfied, each individual and society has to choose which needs and wants to satisfy, and how to do this in the most effective manner, therefore choices have to made. This will apply regardless of the economic system. Trade, as you will see later on in learning unit 10, comes about because resources are not equally distributed, and some participants in the economy will have resources that others may need, and vice versa. However, trade may not always be necessary to allocate scarce resources, especially in non-market economies. Although competition is one way in which to solve the problem of scarcity, this is not the only way in which resources can be allocated. Allocating resources by means of competition will only apply in the case of a market economy. Therefore competing is not essential to solving the problem of scarcity. Cooperation is another way in which the problem of scarcity can be addressed, that is, everyone works together to find the best possible solution. However, cooperation is not essential to solving the problem of allocating scarce resources. The correct answer is: make choices Question 9 Incorrect Mark 0.00 out of 2.00 Flag question Question text The production factor entrepreneurship refers to the investment in equipment that is used in the production process. Select one: True False Feedback Your answer is not correct. Please make sure you understand what the terms capital and entrepreneur refer to. The production factor capital refers to equipment that is required in the production process. For example, for an IT company, all the computer software and hardware will form part of their capital. For a farmer, their tractors, irrigation systems, planter machines, ploughs, etc., will form part of their capital. The type of capital equipment that is required will depend on the type of production that a business is involved with. The entrpreneur is the person who brings all the factors of production together. The correct answer is 'False'. Question 10 Correct Mark 2.00 out of 2.00 Flag question Question text In 30 minutes John can type 200 words or read two chapters of a novel. His opportunity cost of reading two chapters of a novel amounts to ….. Select one: a. typing 200 words and reading two chapters of the novel b. typing 200 words c. reading one chapter of the novel d. typing 100 words Feedback Your answer is correct. well done! The opportunity cost of a choice is the value to the decision maker of the best alternative that could have been chosen but was not chosen. In this case, if John chooses to read two chapters of a novel, he could have typed 200 words instead. Therefore, the opportunity cost of reading two chapters is the 200 words he could have typed instead. The correct answer is: typing 200 words Question 11 Incorrect Mark 0.00 out of 2.00 Flag question Question text Use the following graph to answer the question: Diagram demand and supply of widgets Which of the following statements are correct? a. The quantity supplied at point A is smaller than the quantity supplied at point C b. The quantity supplied at point A is greater than the quantity supplied at point C c. The price of widgets at point A is higher than the price of widgets at point C. d. The price of widgets at point A is higher than the prices of widgets at point E. Feedback Your answer is incorrect. The upward-sloping curve with the positive slope shows the quantities supplied at different prices, while the downward-sloping curve with the negative slope shows the quantities demanded at different prices. Both points A and C are on the curve that shows supply. At point A the price is 1 and the quantity supplied is also 1, while the price is 3 at point C and the quantity supplied is 4. Therefore, the quantity supplied is larger at point C than at point A. The price of widgets is 1 at point A , while the price is 5 at point E. Therefore, the price is higher at point E than at point A. At point A the price of widgets is 1, while it is 3 at point C. Therefore the price of widgets at point A is lower than the price of widgets at point C. The correct answer is: The quantity supplied at point A is smaller than the quantity supplied at point C Question 12 Correct Mark 2.00 out of 2.00 Flag question Question text Economic systems are based on any or a combination of three coordinating mechanisms: tradition, command and the market. Select one: True False Feedback Your answer is correct. Well done! The statement is true. Usually an economic system will have some characteristics of all three coordinating mechanisms. The coordinating mechanism that plays the largest role will usually determine the classification. For example, most economic decisions in the United States are determined by the market, therefore we can classify it as a market system. Most economic decisions in China will be determined by central decision-making, therefore it will be classified as a command system. However, both these economies will also include characteristics of alternative systems; therefore most economies, including the South African economy, are in reality mixed economic systems. The correct answer is 'True'. Question 13 Incorrect Mark 0.00 out of 2.00 Flag question Question text At point C the slope of line B ......................... Diagram pool 1.4 Q3 Select one: a. is equal to 0,67 b. is larger than 0,67 c. cannot be calculated with the available information d. is smaller than 0,67 Feedback Your answer is not correct. The slope of a straight line is the same everywhere on the line. If we calculate the slope by considering the two points indicated by the two dotted lines (i.e. where Y is equal to 9 and 11, and where X is equal to 10 and 7, we can calculate the slope of this line as follows: Therefore slope of the line will be 0,67 everywhere on this line, also at point C. The correct answer is: is equal to 0,67 Question 14 Incorrect Mark 0.00 out of 2.00 Flag question Question text In economic theory, we often assume that the demand for cash is not influenced by the interest rate level. A curve that shows the relationship between the demand for cash and the interest rate level may therefore be … to show that the two variables are … Select one: a. straight; linear b. vertical; unrelated c. horizontal; related d. None of the above Feedback Your answer is not correct. There are multiple variables that are unrelated to one another, for example the price of potatoes has no influence on a student passing his/her examination. The non-relationship is shown by either a horizontal line or a vertical line. Given the option, the correct phrase should read as follows: In economic theory, we often assume that the demand for cash is not influenced by the interest rate level. A curve that shows the relationship between the demand for cash and the interest rate level may therefore be vertical to show that the two variables are unrelated. The correct answer is: vertical; unrelated Question 15 Correct Mark 2.00 out of 2.00 Flag question Question text If the graph of the relationship between two variables slopes upward to the right, the relationship between the variables is positive. Select one: True False Feedback Your answer is correct. Well done! If a graph that shows one variable on the vertical axis and one variable on the horizontal axis has a positive slope it means that the variables change in the same direction, therefore there is a positive relationship between the two variables. The correct answer is 'True'. Question 16 Incorrect Mark 0.00 out of 2.00 Flag question Question text According to the circular flow of income, factors of production earn income when: a. Firms purchase factors of production in the factor market. b. Factors of production are purchased by households. c. Firms purchase goods and services in the factor market. d. Goods and services are purchased in the factor market. Feedback Your answer is incorrect. Factors of production are employed by firms to produce. Firms pay the factors of production; and the factors of production earn income in this way. Firms purchase factors of production in the factor market. Goods and services are not purchased in the factor market, but in the market for goods and services by households. The correct answer is: Firms purchase factors of production in the factor market. Question 17 Incorrect Mark 0.00 out of 2.00 Flag question Question text When the government has to decide whether to allocate funds to education or health expenditure, they are dealing with the scarcity problem in the economy. Select one: a. True b. False Feedback Your answer is not correct. The statement is true. Due to the problem of scarcity, the government, and all participants in the economy, have to make choices. All wants and needs cannot be satisfied due to a scarcity of resources. See section 1.1 of the study guide. The correct answer is: True Question 18 Correct Mark 2.00 out of 2.00 Flag question Question text The South African economy exhibits significant economic freedom. Select one: a. True b. False Feedback Your answer is correct. Well done! The statement is true. South Africa constitutes a mixed economy. In a mixed economy, the government and the market decide on the questions, what, how and for whom goods and services should be produced. Because the South African economy is not fully controlled by the government, this allows significant economic freedom. Therefore, this statement is true. The correct answer is: True Question 19 Correct Mark 2.00 out of 2.00 Flag question Question text Assume an inverse relationship between time studying and time working. This is illustrated by a .... Select one: a. non-linear curve with a positive slope. b. linear curve with a negative slope. c. linear curve with a positive slope. d. vertical curve. e. non-linear curve with a negative slope. f. horizontal curve. Feedback Your answer is correct. Well done! A negative/ inverse relationship involves two variables that move in opposite directions and in this case the two variables are studying and working. For example, for every hour extra spent at work, one hour less is available for study. This relationship is illustrated by a linear curve with a negative slope. The curve is linear as the relationship between the hours of studying and the hours worked remains constant – for every 1 (one) hour not spent working, one additional hour is available for studying. A vertical or a horizontal curve illustrates the relationship of variables that are unrelated. In other words, the change in one variable will not affect the other variable. For example, the rainfall in South Africa has no influence on coal production in Wales. Refer to the study guide, section 2.3, for a discussion of the relationship between variables and how this is depicted using graphs. The correct answer is: linear curve with a negative slope. Question 20 Incorrect Mark 0.00 out of 2.00 Flag question Question text Opportunity cost arises due to........... Select one: a. resources being shifted away from producing one good in order to produce another. b. a lack of monetary resources. c. unlimited resources. d. resources being provided free of charge Feedback Your answer is not correct. The economic problem of scarcity forces us to make decisions, due to the fact that, if resources are to be invested in producing one product, they are not available to produce other goods; this is an example of a choice that involves opportunity cost (see section 1.1.2). Money is not regarded as part of the resources that contribute towards the factors of production. Resources include natural resources, human resources (labour and entrepreneurship) and capital goods. Even when resources are free of charge to participants in the economy, there will still be opportunity cost involved, as scarcity will imply that less of something else has to be provided in order to provide the free resources. If resources are unlimited, there would not be any opportunity cost. Opportunity cost arises due to scarcity. The correct answer is: resources being shifted away from producing one good in order to produce another.