SectionC:Calculations [50]

Question1 [8]

Suppose that business travelers and holidaymakers have the following demand for FlySafairticketsfromJohannesburg toCapeTown.

Price(R)	QuantityDemanded (BusinessTravelers)	QuantityDemanded (HolidayMakers)
1500	2100	3000
2000	2000	2800
2500	1999	2600
3000	1800	2400

a.) As the price of tickets rises from R2000 to R2500, what is the price elasticity of demandfori)thebusinesstravelersandii)theholidaymakers?Makeuseofthearcformula. [4]

b.)Interpretyouranswersina. [4]

Question2 [4]

The table below represents Julie's marginal utilities and total utilities for the consumption ofSteers Burgers and Coke. The price per burger is R24 and a can of coke costs R12. Julie hasR120 to spend on fast food each week. Complete the table and indicate which combinationofproductsshewill choosetomaximiseherutility.Roundanswerstotwodecimals.

	BURGERS	COLA
UNITS	TU	MU	WMU	TU	MU	WMU
0
1	272					13
2			10	276
3		192			108
4	848					8
5		80			72

Question3 [12]

A producer of optical fibre for telecommunication presents the fixed cost and variable costassociated with his production in the table below. The unit price of the optical fibre is solelydeterminedbymarketforces.Completethetablebelow.Roundyouranswerstotwodecimalplaceswhereapplicable.Roundanswerstotwodecimals.

Quantity	Price(R)	Fixedcost(TFC)	Variablecost(TVC)	Totalcost(TC)	Averagecost(AC)	Averagefixedcost (AFC)	Averagevariablecost (AVC)	Marginalcost(MC)
0	100	100	0		-	-	-	-
1	90		30			100		30
2	80		58		79		29
3	70			183	61
4	60			208			27
5	50			253		20

Question4: [7]

Calculatethefollowinggiven theinformationinafour-sectormacroeconomicmodel:

Autonomous Consumption = 50Investment=20

Governmentspending=40

Consumershavea marginal propensitytoconsume of80per cent.

a.)Macro-equilibriumincomeusingtheincome/spendingapproach [4]b.)Thenewequilibrium incomeif investmentdecreases with10.Makeuseofthemultiplier.

[3]

Question5 [10]

Calculate the following given the information in a four-sector macroeconomic model:Autonomous Consumption=100

Tax= 10

Investment=10Governmentspending=30 C

Consumersspend75cofeach rand.

a.)Macro-equilibriumincomeusingtheinjection/leakageapproach. [6]

b.)Thenewequilibriumincome ifinvestmentincreaseswith20.Makeuseofthemultiplier.

[4]

Question6 [8]

Answerthequestionsbasedonthefollowingpriceandoutputdataoverafive-yearperiodforan economythatproducesonly one good.Assumethatyear2 isthebase year.

Year	Units ofOutput	Price per Unit(rand)
1	800	200
2	1000	300
3	1500	400
4	1800	500
5	2000	600

a.)Ifyear 2isthebaseyear,thepriceindexforyear 3is: [2]

b.)Inyear4,nominalGDP wouldbe: [2]

c.)Real GDP inyear5 is: [2]

d.)Thepercentage increaseinreal GDPfrom year2toyear 5is: [2]