Dear Student
In this tutorial letter, we provide you with the answers to the multiple-choice
questions in Assignment 01, with brief explanations where necessary. In most
cases, however, we merely refer you to the prescribed textbook and/or the study
guide. If you have any questions about the answers that are provided, please
discuss this with your fellow students and your e-tutor on the e-tutor website.
1 DISCUSSION OF ASSIGNMENT 01/2018
All references, unless otherwise indicated, are to the prescribed textbook: Mohr, P
and associates 2015. Economics for South African students, fifth edition. Van
Schaik
(Pretoria)
1.1 The correct option is [1]. Households and firms interact via the goods and the
factor market. Refer to figure 3-3 and figure 3-4 on pages 50 and 51 in the
textbook.
1.2 The correct option is [3]. The act of purchasing capital goods i.e. the buying of
machinery, equipment etc. to be used in the production of goods and services
is called either capital formation or investment, which is the same thing. Refer
to page 47 of the textbook.
1.3 The correct option is [3]. Households buy goods and services from firms in the
goods market, so there is an income flow from the goods market to firms as
illustrated in figure 3-4 on page 51 of the textbook.
1.4 The correct option is [2]. The remuneration for an entrepreneur is profit. A
salary is the remuneration for the factor of production labour.
1.5 The correct option is [4]. Consumption is the act of consuming goods and
services and is not part of the remuneration for the four factors of production.
1.6 The correct option is [5]. The first four options are all correct. In option 5
imports (Z) is excluded, which is incorrect.
1.7 The correct option is [1]. Option a is correct. According to page 46 in the
textbook every individual is a member of a household, including a member of
the government.
1.8 The correct option is [3]. Savings is a leakage or withdrawal from the circular
flow of income and spending as per pages 50 – 52 in the textbook, while the
other options are all injections or additions into the circular flow of income and
spending.
1.9 The correct option is [3]. According to page 5 of the textbook every time a
choice is made, opportunity cost is incurred and economists always measure
costs in terms of opportunity costs.
1.10 The correct option is [2]. According to pages 50 – 52 imports are a leakage or
withdrawal from the circular flow of income and spending.
In this tutorial letter, we provide you with the answers to the multiple-choice
questions in Assignment 01, with brief explanations where necessary. In most
cases, however, we merely refer you to the prescribed textbook and/or the study
guide. If you have any questions about the answers that are provided, please
discuss this with your fellow students and your e-tutor on the e-tutor website.
1 DISCUSSION OF ASSIGNMENT 01/2018
All references, unless otherwise indicated, are to the prescribed textbook: Mohr, P
and associates 2015. Economics for South African students, fifth edition. Van
Schaik
(Pretoria)
1.1 The correct option is [1]. Households and firms interact via the goods and the
factor market. Refer to figure 3-3 and figure 3-4 on pages 50 and 51 in the
textbook.
1.2 The correct option is [3]. The act of purchasing capital goods i.e. the buying of
machinery, equipment etc. to be used in the production of goods and services
is called either capital formation or investment, which is the same thing. Refer
to page 47 of the textbook.
1.3 The correct option is [3]. Households buy goods and services from firms in the
goods market, so there is an income flow from the goods market to firms as
illustrated in figure 3-4 on page 51 of the textbook.
1.4 The correct option is [2]. The remuneration for an entrepreneur is profit. A
salary is the remuneration for the factor of production labour.
1.5 The correct option is [4]. Consumption is the act of consuming goods and
services and is not part of the remuneration for the four factors of production.
1.6 The correct option is [5]. The first four options are all correct. In option 5
imports (Z) is excluded, which is incorrect.
1.7 The correct option is [1]. Option a is correct. According to page 46 in the
textbook every individual is a member of a household, including a member of
the government.
1.8 The correct option is [3]. Savings is a leakage or withdrawal from the circular
flow of income and spending as per pages 50 – 52 in the textbook, while the
other options are all injections or additions into the circular flow of income and
spending.
1.9 The correct option is [3]. According to page 5 of the textbook every time a
choice is made, opportunity cost is incurred and economists always measure
costs in terms of opportunity costs.
1.10 The correct option is [2]. According to pages 50 – 52 imports are a leakage or
withdrawal from the circular flow of income and spending.
