HIGHER EDUCATION PROGRAMMES

Academic Year 2024: January - June

Formative Assessment 1: Economics 1 (HECO130-1)
NQF Level, Credits: 5, 16
Weighting: 20%
Assessment Type: Essay Questions
Educator: R. Kisten
Examiner: R. Kisten

Due Date: 28 March 2024

Total: 100 marks

Instructions:

• This paper consists of two sections, Sections A & B

• Section A has four (4) questions and Section B has four (4) questions.
• It is based upon Units 1-8 of your prescribed Economics 1 textbook.
• All questions are compulsory.
• Convert all answers to two (2) decimal places where applicable
• Show all your calculations where applicable.
• Hand-drawn diagrams are acceptable
• A Copyleaks report is not required for this assessment
• Your assessment must be typed using:
o Font: Arial
o Font size: 12
o Line spacing: 1.5

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SECTION A [55 marks]

QUESTION 1 (20 marks)

The following information is available for Joker (Pty) Ltd. The company’s profit
declined in the year 2022, however, sales has increased.
Year 2021 2022
Profit R510 000 R 475 000
Sales R780 000 R810 000

1.1) Calculate the percentage change in profit. (3 Marks)

1.2) Calculate the percentage increase in sales. (3 Marks)

1.3) The CEO of Joker (Pty) Ltd projected a 12% increase in profit and a 19%
decrease in sales at the end of 2023. Calculate the expected profit and sales
figures.
(6 Marks)

1.4) Joker (Pty) Ltd employed three (3) salesmen, Paul, John and Lucky in the year
2023. The ratio of sales of Paul:John:Lucky was 2:3:4. If Paul sold R180 000
worth of goods, what was the value of John and Lucky’s sales? (5 Marks)

1.5) Calculate the value of the total sales figure. (3 Marks)

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QUESTION 2 (10 Marks)

Simplify the following expressions: N.B Show all your workings

2.1) 6𝑥 3 + 12𝑥 2 − 13𝑥 + 2𝑥 3 − 14𝑥 2 + 27 (3 Marks)

2.2) 12(𝑥 2 + 13𝑦 − 6) − 2(4𝑥 2 − 2𝑦 + 4) (3 Marks)

2.3) 27(𝑥𝑦 − 12) + 120 + 2(𝑥𝑦 + 62) − 72 (4 Marks)

QUESTION 3 (15 marks)

Danielle’s clothing factory experienced some financial difficulties in the year 2022. As
a learned economics student, she has requested your aid to assist her in identifying
various linear business functions in order to identify and limit certain costs.

You have extracted the following co-ordinates and information for the month of
December 2022:

Please note that price is the x co-ordinate and quantity is the y co-ordinate.

Variable cost – A (6000; 3)

Total Revenue – B (18000; 6)

Fixed cost = R3500

Using the following co-ordinates and information, construct and simplify the following
functions:

i) Variable cost function (3 Marks)

ii) Total cost function (3 Marks)
iii) Total revenue function (3 Marks)
iv) Net profit (3 Marks)
v) Marginal income (3 Marks)

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QUESTION 4 (10 Marks)

Describe the differences between a bar graph and a histogram. (10 Marks)

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SECTION B [45 marks]

QUESTION 5 (10 Marks)

5.1) Define an opportunity cost and provide an example with your answer. (4 Marks)

5.2) Explain what would cause the Production Possibility Frontier (PPF) to shift
upwards (Outwards) and downwards (Inwards). (6 Marks)

QUESTION 6 (10 marks)

6.1) South Africa follows a mixed economic structure that includes a variety of private
and public control that of which reflects characteristics of both capitalism and socialism.
Identify and describe two (2) major disadvantages of this economic structure.

(4 Marks)

6.2) Using your knowledge on the circular flow, illustrate the flow of money between
the households, firms and foreign trade. Ensure to label your diagram. (6 Marks)

QUESTION 7 (13 marks)

7.1) Jessica owns a food truck and specialises in making waffles and ice-cream. Her
food truck is situated in an area that consists of other food trucks all offering different
types of food. She noticed that in May 2023, the sales of her products begun to
fluctuate. As a learned economics student, you offered your services to map out a
demand schedule(curve) to better understand her customers behaviour.

Using the following information, identify and explain the impact each scenario will have
on the demand curve of Jessica’s products.

7.1.1) Due to the increase in interest rates, consumers incomes have

shrunk(decreased). (4 Marks)

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7.1.2) A competitive food truck opened up next to Jessica offering similar products that
are seen to be substitutes. The price of the competitor’s products are much higher than
Jessica’s. (4 Marks)

7.2)There are various determinants that can cause a change in the supply of goods
and services. Identify any five (5) of these determinants/factors. (5 Marks)

QUESTION 8 (12 Marks)

8.1) Using the following information, calculate the point price elasticity of demand

P0 = 10; P1 = 2 where P0 refers to the original price

Q0 = 2800; Q 1 = 5600 where Q 0 refers to the original quantity

N.B Show all workings and provide the correct formula. (6 Marks)

8.2) Use the three scenarios to determine the name/ type of good and the possible
elasticity value. (6 Marks)

A) The demand for sugar falls as income of consumers increases.

B) The quantity of Socks demanded increases when consumers income increases

but more rapidly than consumer income.

C) The quantity of bags increases when consumer income increases but not as
rapidly as consumer income.

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