a. The difference between capital
goods and consumer goods is
that the former maintains their
full value over time.
b. Capital as a factor of production
refers to the amount of money
required to produce a good or
service.
c. The total income in the
economy is equal to the
total remuneration of the
factors of production.
d. The quality of the factors of
production is insigni cant; it is
only the quantity that matters.
See pages 5 to 6 in the prescribed book.
Question 3
Correct
Mark 1.00 out of 1.00
Which one of the following is NOT a
purpose of economic theory?
a. to describe what happens in the
real world.
b. to serve as a basis for policy
decisions.
c. to help us to understand what is
happening in all aspects of the
real world.
d. to help us predict what will
happen if something changes.
e. to help us explain what is
happening in the economy.
Economic theory has three main
purposes, namely;(i) to explain how
different things are related in the
complex real economic world, (ii)to
predict what will happen if something
changes and (iii) to serve as a basis for
the formulation and analysis of decisions
on economic policy. See pages 12 to 13
of the prescribed book.
Pick n Pay, Spar, Checkers and Shoprite
came together to x the price of gas
heaters in July 2022. This was so that
they could keep the price at a level to
ensure that all four stores remained
pro table. On which area of study in
economics does this focus?
a. microeconomics
b. international economics
c. development economics
d. macroeconomics
The four retail stores (Pick n Pay, Spar,
Checkers and Shoprite) coming together
to agree on a price level for gas heaters
is called a cartel. The purpose of a cartel
is to increase the pro tability of rms and
to prevent competitors from entering the
market for certain goods. This scenario
applies to microeconomics because it
deals with the interaction of rms in a
market and the effects of their actions on
prices.
Macroeconomics focuses on the
performance of the economy as a whole
by providing an overall view of the
economic system of a country. This area
of economics focuses on total
production, income, spending, economic
growth, employment and unemployment,
in ation, price levels and the balance of
payments.
International economics focuses on the
nancial ows, exchange rates and
differences in productive resources
between countries. It is also concerned
with the role of institutions affecting
transactions between countries. For
example, international economics looks
at how a multinational company (for
example Vodafone) investing in South
Africa affects employment, technology
and skills transfer.
Development economics focuses on
improving the economic, social and scal
conditions in developing countries. It
also highlights the differences between
developed and developing countries, and
how these differences can be mitigated.
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