DIPLOMA Sessional Structured Timed Assignment

July – December BEC611 – Economics I

BOTSWANA OPEN UNIVERSITY

Diploma in Business Management

Diploma in Human Resources Management

Economics I
BEC611

Sessional Structured Timed Assignment

Marks – 100

Instructions
a) This assignment covers ALL the units of the course material.
b) The structured assignment consists of four sections: A, B, C and D.
c) Answer questions according to instructions given in each section.
d) This assignment contributes 70% towards final grading for this course.
e) This is an individual assignment. No duplication of work will be tolerated. Any
plagiarism or collusion may result in disciplinary action.
f) Your assignment will be assessed on the factual answer provided based on your reading
and analysis from various references related to this course. In addition, you should
demonstrate a sound knowledge of the topics covered and adhere to the proper
referencing technique.

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

SECTION - MULTIPLE CHOICE QUESTIONS [10 MARKS]

Answer ALL questions.
Each question carries ONE (1) mark.

1. Economics can be defined as the study of how people choose to allocate __________
to satisfy their _____________________.
A. Unlimited wants, scarce resources.
B. Needs, wants.
C. Scarce resources, unlimited wants.
D. Wants, needs.

2. ________________ refers to initiative, talent and organisational ability to incorporate

and co-ordinate the different factors for profitable and efficient production.
A. Capital.
B. Entrepreneurship.
C. Labour.
D. Land.

Use the following diagram to answer question 3.

Source: http://www.flatworldknowledge.com/rittenberg/

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

3. What does point X represent?

A. Opportunity cost.
B. Efficiency.
C. Scarcity.
D. Choice.

4. An economic system where tradition and customs determine what, how and for whom
to produce is called the ________________________ system.
A. Free market.
B. Traditional.
C. Mixed.
D. Command.

Use the following table to answer question 5.

Oranges Apples
0 100
1 95
2 85
3 70
4 40
5 0

5. If the above country was producing two (2) units of good oranges, what is the
opportunity cost of producing an extra unit of orange?
A. 15 units of apples.
B. 70 units of apples.
C. 1 units of orange.
D. 3 units of oranges.

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

6. Which one of the following is not a macroeconomic goal?

A. Control inflation.
B. Achieve unemployment.
C. Promote economic growth.
D. Avoid balance of payment difficulties.

7. An economy experiences inflation when __________________________.

A. The investments are rising.
B. The population is rising.
C. The general price level is rising.
D. The output is rising.

8. Which one of the following does not positively influence economic development?
A. Inflation.
B. Population growth.
C. Natural resources.
D. Capital infrastructure.

9. Suppose that in an economy, aggregate demand remains remain fixed but aggregate
supply shifts to the left. Which of the following will occur?
A. Prices rice and output also rises
B. Prices fall and output also falls
C. Prices rise and output falls.
D. Prices fall and output rises.

10. Which school of thought was introduced in the 1980s by economists David Romer,
Oliver Blanchard, Greg Markiw and others.
A. Keynesian.
B. New Keynesian.
C. Classical.
D. New classical.

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

SECTION B – TRUE/FALSE QUESTIONS [10 MARKS]

Answer ALL questions. Each question carries ONE (1) mark.
State whether each of the following statements is TRUE or FALSE.

1. Microeconomics is the branch of economics that studies the whole economy of a

country as a unit.
2. The concept of opportunity cost emphasises scarcity and choice by measuring the
cost of obtaining a unit of one product in terms of the number of units of other
products that could have been obtained instead.
3. In a free market economy, resource allocation is managed primarily by the customs,
tradition and culture.
4. Supply can be defined as the desire of the consumer to have something backed up
with willingness and ability to pay for it.
5. Goods that tend to have inelastic demand are necessities, such as mealie meal,
shelter and clothes because we do not vary our demand greatly when the price
changes.
6. Inferior goods are those we buy less as our income increases.
7. GDP per capita is calculated by dividing the total income of a country by the number
of inhabitants of that country.
8. The Keynesian school of thought believes that there is need for government to
intervene in the economy so as to correct market failures like unemployment,
inflation and poverty.
9. Gross domestic product is defined as the total final output over which domestic
residents have claim, whether production is located at home or abroad and it is used
to measure stands of living of residents of a nation.
10. Nominal GDP eliminates the effects of inflation in GDP comparisons over time.

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

SECTION C – SHORT ANSWER QUESTIONS [30 MARKS]

Answer ALL questions.

1. Define the following economic terms:

i. Microeconomics.
ii. Entrepreneurship.
iii. Market equilibrium.
iv. Elasticity. (4 marks)
2. With the aid of two (2) separate diagrams, explain the difference between a movement
along a demand curve and a shift of the demand curve, (change in quantity demanded
and change in demand). (8 marks)
3. With the aid of a diagram, explain the law of supply. (5 marks)
4. What are the three (3) economic systems you are familiar with? (3 marks)
5. List any three (3) determinants of elasticity of demand. (3 marks)
6. Outline any three (3) characteristics of a firm operating in a monopoly market structure.
(3 marks)
7. Briefly discuss any two (2) measures the government of Botswana can put in place to
solve the problem of unemployment. (2 marks)
8. Briefly explain your understanding of economic development. (2 marks)

SECTION D ESSAY AND STRUCTURED QUESTIONS [50 MARKS]

Answer any two questions.

QUESTION 1 [25 marks]

a) Use the following information to answer the questions that follows:

Remuneration 10 000
Net trade surplus 8 000
Provision for depreciation 500
Indirect taxation 700
Subsidies 1 000
Net factor payments 500

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

Calculate:
i. GDP at factor cost (2 marks)
ii. GDP at market price (2 marks)
iii. GNP at market price (2 marks)
iv. National Income (2 marks)

b) Distinguish between economic growth and economic development. (4 marks)

c) With the aid of a diagram, explain the income and expenditure model. (5 marks)
d) Complete the following table:

QUESTION 2 [25 marks]

a) The following information shows quantity demanded when prices of bread was
changed from P3 to P4:
Price Quantity
3 600
4 400

i. Calculate price elasticity of demand. (3 marks)

ii. Interpret the answer in (i) above. (2 marks)
b) Use the information in the table above to answer the following questions:
Wheat Sugar
A 100 0
B 90 20
C 70 40
D 40 60
E 0 80

i. Draw a production possibility curve (PPC). (5 marks)

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DIPLOMA Sessional Structured Timed Assignment
July – December BEC611 – Economics I

ii. What is the opportunity cost of moving from point B to C (2 marks)

iii. Illustrate and explain the effects of technological progress using a production
possibility curve. (5 marks)
iv. List any three factors which can shift the PPC outwards. (3 marks)
c) The expected demand and supply for bread is shown below:

Price (P) Quantity Demanded Quantity supplied

(loaves) (loaves)
10 350 50
20 300 100
30 250 150
40 200 200
50 150 250
60 100 300
70 50 350

With the aid of a diagram, state the equilibrium quantity and price for bread.
(5 marks)

QUESTION 3 [25 MARKS]

Most developing countries have been struggling to achieve economic growth and economic
development. As a policy maker explain what advice you would give to these countries to
achieve both economic growth and economic development. (25 marks)

END OF PAPER

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