TASK 1

Point

CAPITAL GOODS

CONSUMER

OPPURTUNITY

GOODS

COST

75

12-0=12

60

12

22-12=10

45

22

22-12=8

30

30

30-36=6

15

36

40-36=4

40

b) When the country increases the production of capital goods from 0 to 15 it needs to
decrease the production of consumer goods from 40 to 36.So, the opportunity cost is 4
units of consumer goods. As the conclusion, the increases in opportunity cost show the
law of increasing opportunity cost.

c) Point A, B, C, D, E and F curve has a negative slope, which indicates a trade-off

between producing one good. At point X, resource or are used inefficiently. At point Y
is desirable because it yields more of both goods, but it is not attainable given the
amount of resource available in the economy.

TASK 2
a) The condition that exist when quantity supplied and quantity demanded are
equal at equilibrium point, there is no tendency for the market price to change.
Example based on the graph, when the price at Rm5.00 both quantities supplied
and quantity demanded are equal when the price at Rm6.00.Quantity supplied
goes 5000 although the quantity demanded goes to 2000.

c) When the price at Rm6.00, there was excess supply (surplus) which quantity
demanded 2000 and quantity supplied 5000, for this situation market force will
decrease the price level to Rm5 to reach the equilibrium point. When the price at
Rm4.00, there were excess demand (shortage) which quantity demanded 6000
and quantity 3000, for this situation market force will increase the price level to
Rm5.00 to reach the equilibrium point.

TASK 3

i.

Point A to B

New Quantity Old Quantity

Old Quantity
New Price Old Price
Old Price

100 50
50

75 90

-0.17

90
=5.90
ii.

Point C to D

New Quantity Old Quantity

Old Quantity
New Price Old Price
Old Price
200 150
150
45 -60
60
= -1.32

= 0.33
-0.25

TASK 4

OUTPUT

Technology 1

100

150

200

250

Technology 2

3100

780

=300

=560

3150

1080

=450

=800

4200

1180

=800

=880

5250

1380

=1250

=1040

860

1250

1680

2290

Technology 3

4100

580

=400

=400

4150

780

=600

=560

5200

880

=1000

=640

6250

1080

=1500

=800

800

1060

1640

2300

5100

480

=500

=320

5150

580

=750

=400

6200

680

=1200

=480

7250

880

=1750

=640

820

1150

1680

2390

a)

For the output of 100, the cheapest technology is technology 2 because the total
cost of capital and labour is only Rm 800.

Technology 1

Technology 2

Technology 3

OUTPUT
K

3100

740

4100

540

5100

440

=300

=280

=400

=200

=500

=160

3150

1040

4150

740

5150

540

150

=450

=400

=600

=280

=750

=200

200

4200

1140

5200

840

6200

640

=800

=440

=1000

=320

=1200

=240

5250

1340

6250

1040

7250

840

=1250

=520

=1500

=400

=1750

=320

100

250

580

850

1240

1770

600

880

1320

1900

b)

For the output of 100, the cheapest technology is technology 1 because the total
cost of capital and labour is only Rm 580.

660

950

1440

2070

TASK 5
a)

TC

TFC

TVC

AVC

ATC

MC

AFC

100

100

130

100

130-100

301

1301

130-100

1001

=30

=30

=130

=30

=100

150-100

502

1502

150-130

1002

=50

=25

=75

=20

=50

160-100

603

1603

160-150

1003

=60

=20

=53.3

=10

=33.3

172-100

724

1724

172-160

1004

=72

=18

=43

=12

=25

185-100

855

1855

185-172

1005

=85

=17

=37

=13

=20

210-100

1106

2106

210-185

1006

=110

=18.3

=35

=25

=16.7

240-100

1407

2407

240-210

1007

=140

=20

=34.3

=30

=14.3

280-100

1808

2808

280-240

1008

=180

=22.5

=35

=40

=12.5

150

160

172

185

210

240

280

100

100

100

100

100

100

100

330

10

390

100

100

330-100

2309

3309

330-280

1009

=230

=25.6

=36.7

=50

=11.1

390-100

29010

39010

390-330

10010

=290

=29

=39

=60

=10

Calculation Formula

Tc Tfc = Tvc

Tvc =Avc
Q

Tc = Atc
Q

Tfc = Afc
Q

Tc = Mc
Q

c) When MC is below AVC, the AVC is declining and MC is increasing. When MC is

above AVC, the AVC and MC are increasing. MC and AVC are equal (MC = AVC)
when AVC is at its minimum point.

TASK 6

TFC

TVC

MC

P=MR

TR

TC

PROFIT

10

15

10+0

0-10

=10

=10

0+15

10+10

15-20

=15

=20

= -5

15+15

10+15

30-25

=30

=25

=5

30+15

10+20

45-30

=45

=30

=15

45+15

10+30

60-40

=60

=40

=20

60+15

10+50

75-60

=75

=60

=15

75+15

10+80

90-90

=90

+90

=0

10

10

20-10

15

=10

10

15

25-20

15

=5

10

20

30-25

15

=5

10

30

40-30

15

=10

10

50

60-40

15

=20

10

80

90-60
=30

Calculation Formula

TFC + TVC =TC

TR TC = PROFIT

TC Q = MC

P Q = TR

15

c) TC and TVC curve has the same shape. TC increases when TVC increases at same
amount. The difference (gap) between TC and TVC is TFC.