ECS2601
MICRO-ECONOMICS (UNISA)
ASSIGNMENT 1, SEMESTER 1 & 2 2021
COMPILED BY RANGA: 061 844 1387
Questions 1 to 20 of the assignment are MULTIPLE-CHOICE questions.
In each question, select the most correct option.
1.
[1] Duration for demand decision.
[2] Substitutability of resources.
[3] Time elapsed since the income change.
[4] The closeness of substitutes.
Explanation- factors that affect how elastic (or inelastic) the price elasticity of demand is: the
availability of substitutes, the timeframe, the share of income, whether a good is a luxury vs. a
necessity, and how narrowly the market is defined.
2.
[1] income elasticity of demand is negative.
[2] price elasticity of demand is positive but less than 1.
[3] price elasticity of demand is negative.
[4] price elasticity of demand is positive but greater than 1.
Explanation: Price elasticity of demand (PED) shows the relationship between price and quantity
demanded and provides a precise calculation of the effect of a change in price on quantity
demanded.
, ECS2601/101/3/2021
3. John owns a bread bakery. When he increases the price of a loaf of bread from R10 to R12,
the percentage in the quantity demanded is 5%. Calculate the price elasticity of demand for
bread.
[1] 0.275
[2] 0.050
[3] 0.300
[4] 0.250
Answer:
4. Yonela consumes cheese cake and tea. When the price of cheese cake increases from
R155 to R160, the quantity demand of teabags decreases from 10 to 6. Then we can say
that…
[1] cheesecake and tea are substitutes.
[2] cheesecake and tea are unrelated.
[3] cheesecake and tea are compliments.
[4] cheesecake and tea are normal goods.
Answer: Complements are goods that are consumed together .The prices of complementary
or substitute goods also shift the demand curve. When the price of a good that complements
a good increase’s, then the quantity demanded of one decreases .
3
MICRO-ECONOMICS (UNISA)
ASSIGNMENT 1, SEMESTER 1 & 2 2021
COMPILED BY RANGA: 061 844 1387
Questions 1 to 20 of the assignment are MULTIPLE-CHOICE questions.
In each question, select the most correct option.
1.
[1] Duration for demand decision.
[2] Substitutability of resources.
[3] Time elapsed since the income change.
[4] The closeness of substitutes.
Explanation- factors that affect how elastic (or inelastic) the price elasticity of demand is: the
availability of substitutes, the timeframe, the share of income, whether a good is a luxury vs. a
necessity, and how narrowly the market is defined.
2.
[1] income elasticity of demand is negative.
[2] price elasticity of demand is positive but less than 1.
[3] price elasticity of demand is negative.
[4] price elasticity of demand is positive but greater than 1.
Explanation: Price elasticity of demand (PED) shows the relationship between price and quantity
demanded and provides a precise calculation of the effect of a change in price on quantity
demanded.
, ECS2601/101/3/2021
3. John owns a bread bakery. When he increases the price of a loaf of bread from R10 to R12,
the percentage in the quantity demanded is 5%. Calculate the price elasticity of demand for
bread.
[1] 0.275
[2] 0.050
[3] 0.300
[4] 0.250
Answer:
4. Yonela consumes cheese cake and tea. When the price of cheese cake increases from
R155 to R160, the quantity demand of teabags decreases from 10 to 6. Then we can say
that…
[1] cheesecake and tea are substitutes.
[2] cheesecake and tea are unrelated.
[3] cheesecake and tea are compliments.
[4] cheesecake and tea are normal goods.
Answer: Complements are goods that are consumed together .The prices of complementary
or substitute goods also shift the demand curve. When the price of a good that complements
a good increase’s, then the quantity demanded of one decreases .
3
