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Memo Work_Chart1(1) (1)

The document outlines various activities related to the principles of economics, focusing on concepts such as scarcity, opportunity cost, and decision-making. It includes exercises for agreeing or disagreeing with statements about economic resources and trade-offs, as well as practical scenarios for evaluating investment projects and educational choices. The activities aim to enhance understanding of economic theories and their applications in real-life situations.

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5 views

Memo Work_Chart1(1) (1)

The document outlines various activities related to the principles of economics, focusing on concepts such as scarcity, opportunity cost, and decision-making. It includes exercises for agreeing or disagreeing with statements about economic resources and trade-offs, as well as practical scenarios for evaluating investment projects and educational choices. The activities aim to enhance understanding of economic theories and their applications in real-life situations.

Uploaded by

sibahlekhumalo05
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 1: ECONOMICS IS THE SCIENCE OF CHOICE

Activity 1

With which of the following statements do you agree or disagree with? (Indicate you answer
with an X).

Statements Agree Disagree


The law of scarcity determines that scarcity is the result of unlimited X
needs and limited resources.
The law of scarcity determines that scarcity is the result of unlimited X
needs and resources.
The law of scarcity determines that scarcity is the result of limited X
needs and resources.
The law of scarcity determines that scarcity is the result of X
opportunity cost and unlimited needs.
The law of scarcity determines that scarcity is the result of physical X
needs and psychological needs.

Activity 2

With which of the following statements do you agree or disagree with? (Indicate you answer
with an X).

Statements Agree Disagree


Labour is a resource that can be used to solve the scarcity problem. X
Externalities are resources that can be used to solve the scarcity X
problem.
Indirect taxation is a resource that can be used to solve the scarcity X
problem.
Capital is a resource that can be used to solve the scarcity problem. X
Entrepreneurship is a resource that can be used to solve the scarcity X
problem.

1
Activity 3

With which of the following statements do you agree or disagree with? (Indicate you answer
with an X).

Statements Agree Disagree


Opportunity cost is that which we forgo, or give up, when we make a X
choice or a decision.
Opportunity cost is a cost that cannot be avoided, regardless of what X
is done in the future.
The concept of opportunity costs suggest a major increase in public X
health-care spending makes an expansion in other areas harder to
achieve.
Opportunity cost is the additional benefit of buying an additional unit X
of a product.
The concept of opportunity cost would be irrelevant if we eliminated X
poverty.

Activity 4

The following figure shows the production possibilities for a country.

Capital
goods B
A
1000

C
600

800 900 Consumables

What is the opportunity cost of increasing the 400 capital goods


production of consumables from 800 to 900?
What is the opportunity cost of increasing the 100 consumables
production of capital goods from 600 to 1000?
If a severe drought occurs, will the production
possibilities curve move to point B, point D or D
remain at points A and C?
How would you describe point D in the figure?
Under-utilisation of resources
(Inferior)

What should happen if the country wants to Increase quantity and/or quality
reach production point B? of resources

2
Activity 5

The following figure shows the productionFood


possibilities for a country.

Clothing
Is a trade-off represented by the movement A-B, C-D or B-C? B-C
Assume that the country starts to reduce the unemployment A-B
rate. Is this illustrated by the movement A-B, B-C or C-D?
If the country uses all its resources to their full potential, and C-D
then starts to experience economic growth, it can be shown as
moving from A-B, B-C or C-D?

Activity 6

Assume that a firm needs to make a decision on whether to invest in either project A or project
B. Assume the following table.

Project A Project B
Net cost R540 000 R600 000
Net revenue R720 000 R780 000

What is the net cost: net revenue ratio for 0.75


project A?
What is the net cost: net revenue ratio for 0.77
project B?
Which project has the smallest net cost A
relative to net revenue ratio?

Activity 7

Assume that a student is currently working 3 days per week for an income of R2000. He uses
the other 4 days to study. Assume that he is now offered R2500 to work 4 days per week. What
is the trade-off for the student?

1 day for R500

Activity 8
3
Assume the following situation for another student. The daily rate of the student is R200 per day
and he is currently working for 3 days per week. Assume that the daily rate increases to R250
per day. The student is happy with his current income of R600 per week. Is there a trade-off in
this instance? What is the number of additional study time per week?

No trade off but he has an extra 0.6 days free.

Activity 9

Assume that parents need to decide to which school to send their child to a good private school.
Assume that they have identified four schools (A, B, C & D). Two very important factors for them
are the cost of attending a school per annum and the distance that they have to travel each
morning. They are also interested in combinations of three other aspects namely high level of
education (H1), good infrastructure (H2) and good sport facilities (H3).

Assume the following consequence table.

School A School B School C School D


Annual fees R105 000 R100 000 R160 000 R140 000
Additional aspects H1+H2 H1+ H2 H1+ H2+ H3 H1+ H2+ H3
included
Distance to school 5km 6km 12km 10km

1. Construct a consequence table after eliminating the irrelevant objective.

School [A] School [B] School [D]


Annual fees R105 000 R100 000 R140 000
Additional aspects H1+H2 H1+ H2 H1+ H2+ H3
included
Distance to school 5km 6km 10km

Assume that the parents negotiated with School D on a reduction of fees if their child is not
participating in any sport activities. School D is willing to reduce their fees to R110 000.

2. Construct a consequence table after eliminating the 2nd round dominated alternative

School [A] School [B]


Annual fees R105 000 R100 000
Additional aspects H1+H2 H1+ H2
included
Distance to school 5km 6km

3. Determine the final solution for the parents.

Name of school that the child will attend


School B

Activity 10

4
With which of the following statements do you agree or disagree with? (Indicate you answer
with an X).

Statements Correct Incorrect


Sunk costs can be recovered. X
Sunk costs must be taken into account when considering future X
actions.
The fact that sunk costs cannot change diverts attention away from X
opportunity cost.

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