Economics Grade 12 Round 2

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Gr 12 R2

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PROTECTIONISM AND FREE TRADE

1. On 30 April 2021, Halima Gikandi, wrote in an article on www.Pri.org that South Africa's resumption of COVID-19 vaccinations has coincided with an extra 1.1 million vaccine doses that were produced locally by South African company Aspen Pharmacare. This is an example of:

1 point

regulating national trade.

import substitution.

protection.

export promotion.

Clear selection

2. Which one of the following descriptions regarding trade agreements is correct?

1 point

A unilateral trade agreement occurs when two or more countries impose trade restrictions on a specific country and no other country reciprocates.

Bilateral trade agreements occur where two countries agree to loosen trade restrictions to expand business opportunities between them by lowering tariffs and confer preferred trade status on each other.

Multilateral trade agreements refer to agreements by more than one country and cover a larger geographic area, which confers a greater competitive advantage on the signatories.

A non-lateral trade agreement standardises regulations, labour standards and environmental protections, thus reducing the regulations and giving the country's exporters a competitive advantage over its foreign competitors.

Clear selection

3. Quotas and tariffs are tools that can be used to protect domestic markets. A tariff differs from a quota in the sense that a tariff refers to:

1 point

imports and quotas to exports.

exports and quotas to imports.

a surcharge levied on exports, where quotas limit the number of goods that can be exported.

a surcharge levied on imports, where quotas limit the number of goods that can be imported.

Clear selection

4. South Africa imposes an import quota or tariff on French wine. This leads to an increase in the price of wine overall. What will most probably be the effect on both domestic wine consumers and domestic wineries?

1 point

Domestic wine consumers will be hurt by the increase in prices, and domestic wineries will benefit from the higher prices.

Both domestic wine consumers and domestic wineries will be negatively impacted, but this will be compensated for by a decline in deaths caused by motor vehicle accidents.

Both domestic wine consumers and domestic wine producers will be negatively impacted because of a reduction in competition from overseas.

Domestic wine consumers will be affected, but the domestic wine producers will lose business as a result of the higher prices.

Clear selection

THE DYNAMICS OF IMPERFECT MARKETS

5. Which ONE of the following is the best example of firms in a perfectly competitive market?

1 point

Clear selection

6. What is the maximum profit that the factory can make from production?

1 point

R2 000 when he produces 4 units, as MR > MC.

R2 350 when he produces 5 units, as MR > MC.

R2 350 when he produces 5 units, as MR = MC.

R1 700 when he produces 6 units, as MR < MC.

Clear selection

7. Calculate the marginal cost (MC) and marginal revenue (MR) when the output increases from 3 to 4 units.

1 point

Clear selection

8. If an input is owned and used by a firm, then its:

1 point

explicit cost is zero.

implicit cost is zero.

opportunity cost is zero.

economic cost is zero.

Clear selection

9. Which of the following short-run cost curves declines continuously as production increases?

1 point

Average total cost

Marginal cost

Average fixed cost

Average variable cost

Clear selection

10. Which of the following is correct?

1 point

Perfect competition is when a few firms produce homogeneous goods.

Monopolistic competition is when many firms produce differentiated goods.

Oligopoly is when many firms produce differentiated goods.

Monopoly is when one firm produces homogenous goods.

Clear selection

MARKET FAILURES

11. Which one of the following circumstances does NOT depict market failure?

1 point

Sellers and buyers in the market have access to important information that would affect a buyer’s decision-making.

The market lacks competition because one or a few providers have a disproportionate amount of power within that market.

An individual’s consumption doesn’t affect another’s ability to access that good or service, and some individuals benefit from the good being provided.

Costs and benefits are unbalanced for providers in the market.

Clear selection

12. Which of the following will be regarded as market failures?

1 point

(i), (iii) and (iv)

(i), (ii) and (iv)

(ii) and (iii)

(i), (ii), (iii) and (iv)

Clear selection

13. Which of the following can be seen as ways that businesses and government respond to market failures?

1 point

(i), (ii) and (iii)

(ii) and (iv)

(ii), (iii) and (iv)

(iii) and (iv)

Clear selection

14. Which of the following can be seen as the effects/results of market failures?

1 point

(i), (iii) and (iv)

(i), (ii) and (iv)

(ii) and (iii)

(i), (ii), (iii) and (iv)

Clear selection

THE DYNAMICS OF PERFECT MARKETS

15. Perfect competition is an industry with:

1 point

many buyers and many sellers.

only one or two buyers, but many sellers.

many buyers, but only one or two sellers.

only one or two buyers and one or two sellers.

Clear selection

16. Clear Water Ltd. is a perfectly competitive firm. The demand for water from Clear Water Ltd. has:

1 point

elasticity equal to the price of water.

unitary elasticity.

infinite elasticity.

zero elasticity.

Clear selection

17. Flipper Good sells fried fish and operates in a perfectly competitive environment. In order to maximise their economic profit, they will sell their fried fish:

1 point

at market price.

above market price.

below market price.

at total market price.

Clear selection

18. The following graph shows the total revenue line of Charlie’s Chocolates. Charlie’s Chocolates operates in a _____ market.

1 point

monopolistic competition

monopoly

oligopoly

perfect competition

Clear selection

The following graph shows the marginal cost and the average total cost curves of Firm T.

19. In this graph, the firm is making a:

1 point

profit of (90 x 50) – (90 x 35).

loss of (90 x 35) – (90 x 50).

profit of (90 x 35) – (70 x 35).

loss of (70 x 35) – (90 x 35).

Clear selection

THE CIRCULAR FLOW, NATIONAL AGGREGATES AND BUSINESS CYCLES

20. During the _____ phase of the business cycle, both the velocity of money supply and investment is high.

1 point

expansion

recovery

recession

depression

Clear selection

21. Which one of the following best describes a complete business cycle?

1 point

Expansion, Peak, Recession, Depression, Trough, Recovery.

Expansion, Recession, Depression, Recovery.

Depression, Recession, Expansion, Recovery.

Depression, Trough, Recession, Expansion, Peak, Recovery.

Clear selection

22. Where can injections be found in the standard circular flow model of the macro economy of a country?

1 point

Households

Producers

Product market

Factors of production market

Clear selection

23. The level of economic activity in a country will:

1 point

change irrespective of changes in either injections or withdrawals.

grow if the value of injections is greater that the value of withdrawals.

increase if S + T – M = I + G – X.

grow if there is no influence from the financial, foreign and government sectors.

Clear selection

24. South Africa sent doctors to Botswana to help with curbing the spread of COVID-19. The remuneration paid to them will:

1 point

have no influence on the national figures of South Africa.

have no influence on the national figures of Botswana.

be added to the GNP of South Africa.

be added to the GNP of Botswana.

Clear selection

THE PUBLIC SECTOR, FOREIGN EXCHANGE MARKET, EXCHANGE RATES AND THE BALANCE OF PAYMENTS

25. Which of the following is not a typical macro economic issue?

1 point

A situation of constantly rising prices of commodities and factors of production.

Periodic fluctuations in the levels of economic or business activities.

The trend in the nation’s total output over the short run.

The rate at which a country’s economy is exchanged for another currency.

Clear selection

26. Which one of the following can be seen as a way government can influence economic growth by means of supply-side policies?

1 point

Cutting taxes to increase disposable income and encourage spending.

Lowering the repo-rate.

Influencing the willingness to work.

Privatisation and deregulation.

Clear selection

27. The Balance of Payments of Country C shows a trade surplus. This means that there is a:

1 point

net inflow of domestic currency from foreign markets.

net inflow of foreign currency from foreign markets.

a real outflow of domestic currency from foreign markets.

a real outflow of foreign currency from foreign markets.

Clear selection

28. On 30 March 2021 Reuters wrote in an article that South Africa recorded foreign direct investment (FDI) inflows of 16.0 billion rand (www.reuters.com). Which one of the following is not seen as FDI?

1 point

A foreign investor purchases shares in a company in South Africa.

A foreign investor sets up a new company in South Africa.

A foreign investor expands the operation of an existing company in South Africa.

A foreign investor borrows funds from a company in South Africa.

Clear selection

29. An appreciation of the South African Rand against the Yen will lead to a/an:

1 point

decrease in South Africa's exports to Japan, and worsen the South African current account balance.

decrease in South Africa's imports from Japan, and improve the South African current account balance.

increase in South Africa's exports to Japan, and improve the South African current account balance.

increase in Japan’s imports from South Africa, and worsen the South African financial account.

Clear selection

30. What would the effect of an appreciation of the Rand on the SA economy be?

1 point

The foreign price of SA exports will increase.

Imported goods will be more expensive.

Lower economic growth as domestic aggregate demand will decrease.

Lower aggregate demand will lead to lower demand-pull inflation.

Clear selection

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