MODULE NAME: MODULE CODE:
ECONOMICS 1A PMIC5111w
ECONOMICS A MICRO ECON211
ASSESSMENT TYPE: ASSIGNMENT 2 (PAPER ONLY)
TOTAL MARK ALLOCATION: 100 MARKS
TOTAL HOURS: 10 HOURS
By submitting this assignment, you acknowledge that you have read and understood all the rules as per the terms in the registration contract, in particular the assignment and assessment rules in The IIE Assessment Strategy and Policy (IIE009), the intellectual integrity and plagiarism rules in the Intellectual Integrity Policy (IIE023), as well as any rules and regulations published in the student portal.
1. No material may be copied from original sources, even if referenced correctly, unless it is a direct quote indicated with quotation marks. No more than 10% of the assignment may consist of direct quotes.
2. Any assignment with a similarity index of more than 25% will be scrutinised for plagiarism. Please ensure you attach an originality report to your assignment if required.
3. Make a copy of your assignment before handing it in.
4. Assignments must be typed unless otherwise specified.
5. All work must be adequately and correctly referenced.
6. Begin each section on a new page.
7. Follow all instructions on the assignment cover sheet.
8. This is an individual assignment – For group assignments, the group may not exceed 4 members and all will be awarded the same mark.
Providing evidence based on valid and referenced academic sources is a fundamental educational principle and the cornerstone of highquality academic work. Hence, The IIE considers it essential to develop the referencing skills of our students in our commitment to achieve high academic standards. Part of achieving these high standards is referencing in a way that is consistent, technically correct and congruent. This is not plagiarism, which is handled differently.
Poor quality formatting in your referencing will result in a penalty of a maximum of ten percent being deducted from the percentage awarded, according to the following guidelines. Please note, however, that evidence of plagiarism in the form of copied or uncited work (not referenced), absent reference lists, or exceptionally poor referencing, may result in action being taken in accordance with The IIE’s Intellectual Integrity Policy (0023).
Markers are required to provide feedback to students by indicating (circling/underlining) the information that best describes the student’s work.
Minor technical referencing errors: 5% deduction from the overall percentage – the student’s work contains five or more errors listed in the minor errors column in the table below.
Major technical referencing errors: 10% deduction from the overall percentage – the student’s work contains five or more errors listed in the major errors column in the table below.
If both minor and major errors are indicated, then 10% only (and not 5% or 15%) is deducted from the overall percentage. The examples provided below are not exhaustive but are provided to illustrate the error
Technically correct referencing style Minor errors in technical correctness of referencing style
Deduct 5% from percentage awarded Major errors in technical correctness of referencing style
Deduct 10% from percentage awarded
• The same referencing format has been used for all in-text references and in the bibliography/reference list. Minor inconsistencies.
• The referencing style is generally consistent, but there are one or two changes in the format of in-text referencing and/or in the bibliography.
• For example, page numbers for direct quotes (in-text) have been provided for one source, but not in another instance. Two book chapters (bibliography) have been referenced in the bibliography in two different formats. Major inconsistencies.
• Poor and inconsistent referencing style used intext and/or in the bibliography/ reference list.
• Multiple formats for the same type of referencing have been used.
• For example, the format for direct quotes (in-text) and/or book chapters (bibliography/ reference list) is different across multiple instances.
Referencing format is technically correct throughout the submission.
Position of the reference: a reference is directly associated with every concept or idea.
For example, quotation marks, page numbers, years, etc. are applied correctly, sources in the bibliography/reference list are correctly presented.
Generally, technically correct with some minor errors.
• The correct referencing format has been consistently used, but there are one or two errors.
• Concepts and ideas are typically referenced, but a reference is missing from one small section of the work.
• Position of the references: references are only given at the beginning or end of every paragraph.
• For example, the student has incorrectly presented direct quotes (in-text) and/or book chapters (bibliography/reference list).
• The referencing format is incorrect.
• Concepts and ideas are typically referenced, but a reference is missing from small sections of the work.
• Position of the references: references are only given at the beginning or end of large sections of work.
• For example, incorrect author information is provided, no year of publication is provided, quotation marks and/or page numbers for direct quotes missing, page numbers are provided for paraphrased material, the incorrect punctuation is used (in-text); the bibliography/reference list is not in alphabetical order, the incorrect format for a book chapter/journal article is used, information is missing e.g. no place of publication had been provided (bibliography); repeated sources on the reference list.
Congruence between in-text referencing and bibliography/
• All sources are accurately reflected and are all accurately included in the bibliography/ reference list.
Generally, congruence between the intext referencing and the bibliography/ reference list with one or two errors.
• There is largely a match between the sources presented in-text and the bibliography.
• For example, a source appears in the text, but not in the bibliography/ reference list or vice versa. A lack of congruence between the in-text referencing and the bibliography.
• No relationship/several incongruencies between the in-text referencing and the bibliography/reference list.
• For example, sources are included in-text, but not in the bibliography and vice versa, a link, rather than the actual reference is provided in the bibliography.
In summary: the recording of references is accurate and complete. In summary, at least 80% of the sources are correctly reflected and included in a reference list. In summary, at least 60% of the sources are incorrectly reflected and/or not included in reference list.
Overall Feedback about the consistency, technical correctness and congruence between in-text referencing and bibliography:
Question 1 (Marks: 10)
Identify the relevant economic concept which can be matched to the descriptions below. Simply give the question number and the relevant terms/words in each case.
Q.1.1 Government sets a price level in a market that is aimed at assisting consumers. (2)
Q.1.2 Quantity demanded is less than quantity supplied. (2)
Q.1.3 A situation where the quantity supplied of a good is highly sensitive to a change in the price of the good. (2)
Q.1.4 A curve showing combinations of two goods that provide a consumer with a constant amount of utility. (2)
Q.1.5 The addition to total output when one more worker is hired, ceteris paribus. (2)
Question 2 (Marks: 25)
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
• 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. (3)
Q.2.1.2 The number of firms selling bottled water in Gauteng has increased. (3)
Q.2.1.3 The price of bottled Vitamin water (a substitute in consumption) has decreased. (3)
Q.2.1.4 The price of plastic bottles has increased, ceteris paribus. (3)
Q.2.1.5 Household incomes have decreased. (3)
Q.2.2 Figure 1 below shows the demand and supply of coffee at a local café. Study the graph and then answer Q.2.2.1 to Q.2.2.5 by completing each sentence to make it correct.
Q.2.2.1 Assuming no government intervention and considering the original demand and supply curves (D and S), at a price of R10 there is an _____________ ______________ of 40 cups of coffee. (2)
Q.2.2.2 The shift of the supply curve to S1 indicates an ___________ in supply and a new equilibrium quantity of _______ cups of coffee. (2)
Q.2.2.3 At a price of R22 and assuming no government intervention, the _________ _____________ is 90 cups of coffee. (2)
Q.2.2.4 Considering curves D and S, if government intervenes and sets a price of R26, this is called a _______ ______________ and will result in a ______________ of 40 cups of coffee. (2)
Q.2.2.5 Consider demand (D) and supply (S1). If government sets a price of R18 for a cup of coffee, then the _____________ ______________ will be 140 cups of coffee. (2)
Question 3 (Marks: 25)
These questions require application of economic theory relating to elasticity of demand and supply. All calculations must be shown in full. Answer ALL the questions.
Q.3.1 A store that sells rice discovers that when the price of 1kg rice Is R24 per kilogram, the quantity demanded is 306 kgs per week. When the price decreases to R21 per kg, then the sales increase to 340 kgs per week. Use this information to answer questions Q.3.1.1 and Q.3.1.2 below.
Q.3.1.1 Determine the price elasticity of rice using the Arc method. (5)
Q.3.1.2 Discuss the relationship between the price elasticity of rice and the total revenue the store received from the sales. Advise the store on an appropriate pricing strategy. (7)
Q.3.2 The store selling rice makes a further discovery, when the price of couscous changes from R30 per kg to R26 per kg, then the quantity of rice demanded decreases from 1360 kg per month to 1238 kg per month. Use this information
to answer Q.3.2.1 and Q.3.2.2 below.
Q.3.2.1 Use the point method to calculate the cross elasticity of demand for these products. (5)
Q.3.2.2 Comment on the significance of your solution in Q.3.2.1. (2)
Q.3.3 Identify three factors that are likely to affect the price elasticity of supply for rice. Clearly indicate the impact that each factor will have on the price elasticity. (6)
Question 4 (Marks: 20)
These questions require application of economic theory. They might include calculations and/or the drawing of graphs. Answer ALL the questions.
Q.4.1 Read through the excerpt below and then answer the question that follows.
“Some flower prices have shot up, partly because of the disruption wrought by the Covid-19 pandemic and the national lockdown.”
The prices of roses and chrysanthemums have tripled while the prices of carnations and lilies have doubled, according to some industry players.”
“The national lockdown closed the local flower industry from March 27, and the government allowed it to reopen again on May 1. When the flower market opened in May, there was a limited supply of local roses because it was autumn and it was getting cold, Gross said.
Farmers need to prune their roses over July and August, and this meant that there was little supply of local roses during those months, he said.”
Adapted from article written by Justin Brown for Business Insider:
[Accessed 28/10/2020] (10)
With reference to the market for roses, and given the scenario explained in the excerpt, further assume that when the market opened up, the demand for roses increased. Explain, with the aid of a graph, the overall impact of these changes on the equilibrium price and quantity of roses.
(Note: Five marks for the graph and five marks for the explanation)
Q.4.2 Thandi has R700 to spend on hamburgers and transport. A hamburger costs R35 while a car trip is R25. Use this information to derive and draw Thandi’s budget line. On your graph (diagram) you must include an indifference curve showing where Thandi would be maximising satisfaction (consumer equilibrium). Put hamburgers on the vertical (y) axis. (5)
Q.4.3 Use your own example to clearly differentiate between an “accounting profit” and an “economic profit”. (5)
Question 5 (Marks: 20)
This question is based on the scenario provided below.
ACE Manufacturers is a small firm that makes children’s clothing which it sells to a large retail store. Mrs Samuels, who started the business, enjoys managing the operation.
The production process involves the designing, cutting, sewing, decorating and finishing of the various items.
Currently the factory space is divided into areas allowing for each of the processes to take place efficiently. The factory facility is rented on a three-year contract basis. Mrs Samuels has recently signed a new contract for another three year period.
Mrs Samuels is keen to correctly identify the different costs in the business and analyse each of the operations to identify whether she is maximising output. In order to do this she requires assistance with understanding the “economics” of the operation.
Q.5.1 Discuss the different types of costs that this operation will face in the short run.
Give appropriate examples in each case.
[Hint: Use the economic theory you have studied relating to the production costs of firms together with the nature of the operation described in the scenario.] (10)
Q.5.2 Table 1 below, shows the output of 6 machinists in the sewing section of the business on a daily basis. Use this information to explain, and illustrate numerically, the law of diminishing returns to Mrs Samuels. In your
explanation, you should also refer to the marginal product and average product of the machine operators.
Number of machine operators Total items stitched per day
END OF PAPER
MODULE NAME: MODULE CODE: