Copperbelt University

School of Business

Principles of Economics: BS 110/ BF 110. Tutorial Sheet 1

1. On one page, make brief notes on your understanding of economics. Are there
significant differences between the definition provided by Case E. Karl and Ray
C. Fair to that provided by Samuelson P. A. (Both Text books are in the Course
outline).
2. The university produces two commodities: research and teaching. The resources
the university uses include faculty and staff, libraries, classrooms and so on. The
following points indicate some points on the Universities PPF:

A B C D E F G
Research 900 750 600 450 300 150 0
Teaching 0 20 45 75 110 150 200

a) Does research production by the university exhibit increasing, constant or

decreasing per unit opportunity cost?
b) Graph the university’s PPF (assuming that straight line segments connect the
points specified above). Indicate which areas of the graph correspond to
unattainable production points, production points that make most effective use of
the university’s resources and points where there are un employed resources.
c) Supposing the university is at point B but would like to alter production to point
C. What would be the per teaching unit opportunity cost of producing the extra
teaching unit?
d) What will happen to the PPF if the university resources are reduced to half?

3. A nation with fixed quantities of resources is able to produce any of the following
combinations of Bread and ovens
Loaves of Bread (millions) Ovens (Thousands
75 0
60 12
45 22
30 30
15 36
0 40

a) Using the data in the table, graph the PPF (with ovens on the vertical axis)
b) Does the principle of increasing opportunity cost hold in this country (explain in
terms of what happens to bread production measured in number of ovens as bread
production increases).
4. Make short notes ion the following concepts
a) The economic problem
b) Opportunity cost
c) Economic systems
d) The methodology of economics
e) Scarcity
f) Choice

5. Consider the Table below representing the number of 21-inch colour TV’s individuals
are willing to purchase in Ndola and Kitwe:

Price Quantity Demanded-Kitwe Quantity Demanded-Ndola

K350 100 75
K325 150 100
K300 200 125
K275 250 150
K250 300 175

a) Plot these data, with price (P) on the vertical axis and quantity (Q) on the
horizontal axis. Connect the points for quantity demanded in Ndola and Kitwe.
Lebel the Ndola line D1 and the Kitwe line D2).
b) Find the increase in the quantity of TV units purchased in Ndola and Kitwe when
the price of TV’s is lowered from K300 to K275.
c) Find the slope of the Demand lines D1 and D2 when the price is lowered from
K300 to K275.
d) What does the difference in the slope of demand lines D1 and D2 indicate?

6. In your own words and in half 300 words, distinguish micro from macro economics.

7. Below is data for unemployment between 1987 (Quota1) and 1990 (Quota 1):

Year 1987 1988 1989 1990

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
% 10.9 10.6 10.1 9.5 8.9 8.5 8.0 7.6 7.0 6.6 6.3 5.9 5.7
unemployment

a) Draw a time series graph using the data in the table

b) What conclusions can you draw from the data?