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Question 1:
1.1 Explain why economics is a social science.
Economics deals with human activities in the society how they allocate scarce
resources to satisfy their unlimited wants (institute of Marketing Management,
2020).

1.2 Define opportunity cost and give an example of an economic problem

involving opportunity cost that the South African government is currently facing
Opportunity cost is the cost of giving up on decision A in order to have decision
B. Mohr et al (2015) stated that “the opportunity cost of a choice is the value of
the best forgone opportunity” (p.6). Power crisis and high employment are
economic problems facing South Africa. The South African government has to
let go either investment in project which boost employment or concentrate on
investing on power importation from Mozambique. The South African
government has to sacrifice employment in order to solve power crisis

1.3 Ceteris paribus means all things being the same .It a state of equilibrium
.(Tucker,2011) explained that ceteris paribus allows us to focus on the
relationship between two variables for example change in price of bread and
the quantity of bread purchased per month .It allows us to concentrate on
selected variables

1.4Distinguish between „capital‟ and „money‟ in the study of economics.

(Tucker,2011) explained that capital is the plants, machinery, and equipment
used to produce other goods whereas money is a medium of exchange it is
not a resource like capital since it does not produce any good or service
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Question 2:
2.1 (Mohr et al 2015)Natural resources these are gifts of nature for example the
air we breath, sunshine, forest minerals(gold etc) ,animal life etc. The supply of
natural resources always stays the same ,there supply cannot be increased if
demand increases eg if coal being mined At hwange in Zimbabwe has depleted
it cannot replaced.

Labour
(Mohr et al ,2015) It the mental physical effort used in the production of goods
and services for example a builder constructing a bridge will be using both
mental and physical effort.

Entrepreneurship
(Mohr et al ,2015) Is the creative ability to seize opportunity and willingness to
take risks by combining resources to produce innovative good and services with
the aim of seeking profit for example when Steve Jobs started the apple
company he was able to seize opportunities in the telecommunications industry
and he took risk to develop the first IPhone in order to him to earn profit

2.2 Labour –wages

Lands –rent
Capital –interest
Entrepreneurship - Profit
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Question 3:

3.1
Mohr et al (2015) explained the following:
Households involve people who consume goods and services which have been
produced by firms. Households supply labour to the firm. in return for wages or
salaries .When households consumes goods and services produced by firms
that is an injection into the circular flow.

Firms
These are companies or units that utilise labour from households to produce
goods and services .Firms are involved in the production of good and services
for example in Zimbabwe we have Lobels which is a manufacturing company it
employs labour (works) from household (individuals) to produce bread .Lobels
spend on production of bread when its purchases buildings ,ovens (machinery)
.Spending by firms is an injection in the circular flow

Government
Government injects money into the economy when it wants to stimulate the
economy using Expansionary fiscal policy. Government inject money into the
through building infrastructure, health care, education.

Due to globalisation and international trade this has facilitated that countries like
Zimbabwe can export what they have produced within their borders eg beef and
we can import those we cannot produce. In Zimbabwe we have been import Ex
Japanese cars in recent years. Exports are injection since they bring income to
Zimbabwe whilst imports are leakages from the Zimbabwean economy.
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Question 4:
4.1 Identify the most important determinants of market demand and give the
symbol for each.
(institute of Marketing Management,2020) stated the following
 Price (Px) does not cause a change in demand .It only cause a
movement along the demand curve whilst other factors listed below
other than price causes a shift of the demand curve.
 Price of substitutes & complements (Pg) –
 Substitutes an reduction in the price of bread decreases demand for
sweet potatoes
 Complements-a decrease in the price in the price sugar cause higher
demand for Bread
 Taste, preference & advertising (T) - for no apparent reason consumers
want Johnson& Johnson baby cream .The demand curve will shift to the
right from D1 to D2
 Household income (Y) – if consumer income increase ,demand for
normal goods will increase and the demand curve will shift to the right
 Size of household (N) –Increase in the number of population in
Zimbabwe will lead to an increase in demand
 Expected future prices (Pe)- if consumers expect that fuel will be in short
supply starting next week or or (Zimbabwe energy distribution authority )
ZERA will increase prices of fuel next month .Consumers will fill their
tanks and they will be an increase in demand .

4.2 Identify the most important determinants of market supply and give the
symbol for each
(institute of Marketing Management,2020) stated the following
 Price of alternative products (Pg) - A decline in the price of cabbage
causes farmers to increase the supply of onions
 Price of factors of production (Pf) - A decline in labour wages will cause
firms to hire more labour and supply will increase
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 Expected future prices (Pe) - Farmers expect the future price of onions
to decline, so they increase the present supply of onions .
 Level of technology (Ty) – New technology of producing bread will
reduce manufacturing cost and the supply of bread increases
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Question 5:
5.1 a
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References

Institute of Marketing Management Graduate School.(2020)

ECOP101.Principles of Economics 101 Learner Guide. South Africa: Institute of
Marketing Management Graduate school

Mohr et al (2015) Economics for south African students.5th edition. Pretoria:

Van Schaik Publishers

Tucker, B.I. (2011) Micro economics for today. Mason: South Western Cengage
Learning