Exam (elaborations)
Ecs1501 Assignment 5 Semester 2 2023
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9/25/23, 12:04 PM Assessment 5: Attempt reviewUNISA 2023 ECS1501-23-S2 Assessments Assessment 5
QUIZ
Started on Monday, 25 September 2023, 11:49 AM
State Finished
Completed on Monday, 25 September 2023, 12:04 PM
Time taken 15 mins 18 secs
Marks 14.00/15.00
Grade 93.33 out of 100.00
Question 1
Complete
Not graded
I con rm
that this assessment will be my own individual work;
that I will not communicate with anyone else in any way during the completion of this assessment;
that I will not cheat in any way in completing and submitting this assessment.
I con rm.
I do not con rm.
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=13673675&cmid=622803 1/12
,9/25/23, 12:04 PM Assessment 5: Attempt review
Question 2
Complete
Mark 1.00 out of 1.00
In a competitive market, supply and demand decrease simultaneously. The effect on equilibrium quantity is
a decrease.
uncertain, but equilibrium price will decrease.
uncertain, but equilibrium price will increase.
an increase.
When supply and demand decrease simultaneously, the equilibrium quantity decreases while the equilibrium price is
indeterminate.
The decrease in demand causes the demand curve to shift to the left and the equilibrium price and quantity decrease.
The decrease in supply is represented by a leftward shift of the supply curve and it puts upward pressure on prices, while the
equilibrium quantity decreases.
In each instance, the equilibrium quantity is lower.
However, the decrease in demand lowers the equilibrium price, while the decrease in supply causes a higher equilibrium price.
And the net result?
If the decrease in demand is greater than the decrease in supply, the equilibrium price will decrease. If the decrease in supply
is greater than the decrease in demand, the equilibrium price will increase and if the decreases in demand and supply are
roughly equal, the equilibrium price may remain relatively stable.
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=13673675&cmid=622803 2/12
,9/25/23, 12:04 PM Assessment 5: Attempt review
Question 3
Complete
Mark 1.00 out of 1.00
The market for good A (an inferior good) is in equilibrium. Then average household income increases and, simultaneously, new
regulations from the Department of Health on the producers of good A add to production costs. As a result, the equilibrium
price of good A will
increase and the equilibrium quantity of good A will either increase, decrease, or stay the same.
decrease and the equilibrium quantity of good A will either increase, decrease, or stay the same.
either increase, decrease, or stay the same, and the equilibrium quantity of good A will increase.
either increase, decrease, or stay the same, and the equilibrium quantity of good A will decrease.
The increase in the average household income decreases the demand for good A, remember good A is an inferior good. The
decrease in demand (due to the inferior good status) is illustrated by a leftward shift of the demand curve and the new
equilibrium price and equilibrium quantity are lower.
The new regulations implemented by the Department of Health on the producers of good A add to production costs leading to
a decrease in the supply of good A. This decrease in supply is represented by a leftward shift of the supply curve resulting in a
higher equilibrium price for good A, while the equilibrium quantity decreases.
The overall effect on the equilibrium price of good A is indeterminate (it may either increase, decrease, or remain stable) as it
will depend on the relative sizes of the shifts in demand and supply:
If the decrease in demand is greater than the decrease in supply, the equilibrium price will decrease, and the equilibrium
quantity will decrease.
If the decrease in supply is greater than the decrease in demand, the equilibrium price will increase, and the equilibrium
quantity will decrease.
If the decreases in demand and supply are roughly equal, the equilibrium price may remain relatively stable, but the equilibrium
quantity will decrease.
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=13673675&cmid=622803 3/12
, 9/25/23, 12:04 PM Assessment 5: Attempt review
Question 4
Complete
Mark 1.00 out of 1.00
Shoes are considered to be a normal good. What would happen to the equilibrium price and equilibrium quantity of shoes if
income increases and the cost of labour to produce shoes increases?
The equilibrium price will go up and equilibrium quantity will be indeterminate.
The equilibrium price will go up and equilibrium quantity will go up.
The equilibrium price will go down and equilibrium quantity will be indeterminate.
The equilibrium price will be indeterminate and equilibrium quantity will go up.
The increase in income increases the demand for shoes (a normal good), while the increase in the cost of labour (used in the
production of shoes) decreases the supply of shoes. Thus, the equilibrium price of shoes will increase, and the equilibrium
quantity will be indeterminate.
An increase in income leads to an increase in the demand for shoes. The increase in demand causes the demand curve to
shift to the right and the equilibrium price and quantity increase.
When factor prices, such as the cost of labour, increase it raises the production costs for shoe manufacturers leading to a
decrease in the supply of shoes. This decrease in supply is represented by a leftward shift of the supply curve resulting in a
higher equilibrium price for shoes, while the equilibrium quantity decreases.
In each instance, the equilibrium price of shoes is higher.
However, the increase in demand increases the equilibrium quantity, while the decrease in supply reduces the equilibrium
quantity. And the nett result?
If the increase in demand is greater than the decrease in supply, the equilibrium quantity will increase. If the decrease in supply
is greater than the increase in demand, the equilibrium quantity will decrease and if the increase in demand and decrease in
supply are roughly equal, the equilibrium quantity will remain relatively stable.
Question 5
Complete
Mark 1.00 out of 1.00
An increase in demand coupled with a decrease in supply would necessarily result in
a lower equilibrium quantity.
a higher equilibrium price.
a lower equilibrium price.
a higher equilibrium quantity.
An increase in demand coupled with a decrease in supply would necessarily result in an increase in the equilibrium price of the
product. The increase in demand puts upward pressure on prices because consumers are willing to buy more at each price
level. The decrease in supply puts upward pressure on prices because producers are willing to supply less at each price
level. As a result, the equilibrium price of the product will rise. However, the impact on the equilibrium quantity will depend on
the relative sizes of the shifts in demand and supply.
https://mymodules.dtls.unisa.ac.za/mod/quiz/review.php?attempt=13673675&cmid=622803 4/12
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