Introduction to Economics: Revision Questions
STRICTLY FOR STUDENTS OF GROUPS 4, 5, 6 & 7 ONLY
Revision 1(2012) Questions In addition to the questions below, can you bring along the 2011ZB question and examiners’ commentary. From the 2011ZB paper -- Would like to quickly run through the long question 4; long Question 3 is included in this set of question. Question 2 and some of the short questions have already been covered in the Extra lesson we had. From the 2011ZA Paper – note o that Question 3 on perfect competition is rather identical to a question in our tutorial 4(question 8). I have included the long question 2 in this set of revision questions. Short Questions 1(a) The production of a unit of x requires half a unit of labour and a quarter of a unit of capital; the production of a unit of y requires one unit of labour and one unit of capital. There are 100 units of labour and 100 units of capital. As the economy needs less labour and less capital per unit of x than it requires for y, it will never specialise in the production of y. True or false? Explain. Cross Refer: A. To produce one unit of commodity x requires only half a unit of labour (no capital is needed). Each unit of x needs storage space during the production process which is limited to up to 180 units of x. Commodity y, on the other hand, requires a quarter of a unit of labour and half a unit of capital for the production of one unit. There are 100 units of labour and 100 units of capital. (i) Draw the production possibility frontier. (ii) What will be the opportunity cost of y when we produce 30 units of it? (iii) What will be the opportunity cost of x when we produce 80 units of it? (iv) Had we produce 120 units of x efficiently and the international price of x was 1y for 1x, what would now be produced in the economy? B. An economy produces two goods (x and y). There are two types of means of production: labour and a special type of machines (capital). One unit of labour can either produce two units of x or two units of y or any linear
Revision 1(2012) Questions In addition to the questions below, can you bring along the 2011ZB question and examiners’ commentary. From the 2011ZB paper -- Would like to quickly run through the long question 4; long Question 3 is included in this set of question. Question 2 and some of the short questions have already been covered in the Extra lesson we had. From the 2011ZA Paper – note o that Question 3 on perfect competition is rather identical to a question in our tutorial 4(question 8). I have included the long question 2 in this set of revision questions. Short Questions 1(a) The production of a unit of x requires half a unit of labour and a quarter of a unit of capital; the production of a unit of y requires one unit of labour and one unit of capital. There are 100 units of labour and 100 units of capital. As the economy needs less labour and less capital per unit of x than it requires for y, it will never specialise in the production of y. True or false? Explain. Cross Refer: A. To produce one unit of commodity x requires only half a unit of labour (no capital is needed). Each unit of x needs storage space during the production process which is limited to up to 180 units of x. Commodity y, on the other hand, requires a quarter of a unit of labour and half a unit of capital for the production of one unit. There are 100 units of labour and 100 units of capital. (i) Draw the production possibility frontier. (ii) What will be the opportunity cost of y when we produce 30 units of it? (iii) What will be the opportunity cost of x when we produce 80 units of it? (iv) Had we produce 120 units of x efficiently and the international price of x was 1y for 1x, what would now be produced in the economy? B. An economy produces two goods (x and y). There are two types of means of production: labour and a special type of machines (capital). One unit of labour can either produce two units of x or two units of y or any linear