Sunday, November 29, 2015

95. Plagiarism

Download the following PDF file and read the following guidelines - the section on Plagiarism:

94. Real National Income per capita

93. The answer.

Not the correct answer.

Go back and select another alternative

92. The answer.

Not the correct answer.

Go back and select another alternative

91. The answer

Not the correct answer.

R 250 00 mil is merely the nominal difference between the GDP in the year 2000 and 1995. It still does not tell one whether the economy grew, stayed the same or contracted. To calculate the real GDP for 2000 one has to relate the 2000 GDP the price index. One does that by saying "120 is to 100 like 200 000 is to ???" Go back and select another alternative

90. The answer.

Not the correct answer.

Go back and select another alternative.

89. The correct answer

The correct answer

88. The answer.

Here are four alternatives:

A. R 25 000 000

B. R 249 000 000

C. R 166 666 667

D. R 145 833 332

E. Cannot be calculated based on the given information

Which one did you calculate. Click on the letter to see if you are correct. If your answer does not correspond with any one given, select E above.

87. Real GDP - a calculation

The market value of all final goods and services produced in a given year within the borders of a country, adjusted as to the changes in the general price level (inflation rate) is known as Real Gross Domestic Product. Nominal GDP is the GDP in money terms without the effects of inflation or deflation. One can only arrive at Real GDP, after considering the effects of inflation or deflation. So Real GDP arrives at the actual changes in the quantity of goods and services produced with the effects of inflation (the decrease in the value of money) stripped out. Calculate the real GDP for the year 2000 by using the following figures:

                   ( R million)

1995              175 000                      100 (base year)
2000              200 000                      120

After you have calculated the answer, you can find it by clicking HERE

86. Distinguish between "the economic cycle" and "the business cycle"

"the economic cycle" is the flow of goods, services and money in an economy. and "the business cycle" describes the ups and downs in the economy (expansions and contractions in the output levels of the economy).

Thursday, November 26, 2015

85. absolute advantage

The principle of absolute advantage refers to the ability of a party (an individual, or firm, or country) to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources. Adam Smith first described the principle of absolute advantage in the context of international trade, using labor as the only input. David Ricardo argued that a country does not need to have an absolute advantage in the production of any commodity for international trade between it and another country to be mutually beneficial. Since absolute advantage is determined by a simple comparison of (normally) labor productiveness, it is possible for a party to have no absolute advantage in anything; in that case, according to the theory of absolute advantage, no trade will occur with the other party. In reality trade does take place - Ricardo then isolated the idea of Comparative advantage - which refers to the ability to produce specific goods at a lower opportunity cost. ================================ Useful videos

It may be useful to view some of the other videos too.

You can also look at


Tuesday, November 24, 2015

84. What is a job?

A job simply comes into existence when one person gets another person to deliver value to him (build a wall, look after his child, cook a meal or whatever)in exchange for another value (normally in the form of a money payment). Why does the person hire another to do something; why not do the job oneself and save the money? It has to do with opportunity cost. Let me explain: I buy bread at the shop - it costs me say R 12. Why did I not bake it myself? Let us say it would have taken me an hour to bake a bread and let us say I could have earned R 100 in that hour. The opportunity cost of me spending an hour baking bread is R 100 (the money that I could have earned in stead of baking the bread). By buying the bread I have a bread and R 88; if I bake the bread myself I will just have the bread (and that is excluding the costs of the ingredients - just my time. The same principle is true when I purchase your labor - it is my interest to do so for as long as your cost is less than my opportunity cost of the alternative action that I will by performing in that time. Even if that alternative use is reading the newspaper while you mow my lawn. I must however value the reading more than what you cost me. If you charge too much the job disappears and I do it myself. A job is where the value created by an employee is greater than what an employer values the money that he will be paying you. You on the other hand value the money more than the time and effort you spend on the lob. it is a win-win situation for both parties. If you value drinking beer higher than the money the job also does not come into existence for you. Someone else with a different set of values may be mowing the lawn.

Saturday, November 21, 2015

83. The difference between an import tariff and an import quota

C.M. Heydenrych January 2017. The difference between an import tariff and an import quota.

The difference between an import tariff and an import quota is relatively simple - a tariff is an amount that the importer needs to pay based on a percentage of the value of the goods.

This will provide the government an income.

A quota is a quantitity of goods that may be imported. This merely restricts the quantity of goods that may be imported.

Both of these interventions in the market is detrimental to the consumer as it will result in an increase in price. The first will be a direct increase since the cost of the product will have increased, the second will result in the market price to increase because of the artificial shortage that has been created by the quota.

Both of these methods also increase the probability for smuggling and corruption to come into being and though useful as short term instruments to solve a particular problem have long term negative impacts on the economy such as protecting inefficient producers locally at the expense of the consumer.

These practices lead to the increase of input costs to manufacturers which make them less likely to have the competitive advantage when exporting.

It also restricts imports from exporting countries, which in a global market means that we are in effect restricting our exports since foreign importing countries have not earned the currency through their exports to be able to import our goods and services.


Friday, November 20, 2015

82. Praxeology

Look this up on Google - you will find a fascinating body of information that could alter your view on Economics.

Praxeology (Gr. πρᾶξις (praxis) ″action″, λόγος (logos) ″talk, speech″) is the deductive study of human action based on the notion that humans engage in purposeful behavior, as opposed to the notion that all human behaviour is merely stimulus response in nature based on learning and genes or reflexive behavior like sneezing and inanimate behavior

Praxeology is the study of those aspects of human action that can be grasped a priori; in other words, it is concerned with the conceptual analysis and logical implications of preference, choice, means-end schemes, and so forth.

Praxeology is the distinctive methodology of the Austrian School. The term was first applied to the Austrian method by Ludwig von Mises

Walter Block: Praxeology and Austrian Economics -

Sunday, November 8, 2015

77. More exam prep guidelines Economics 1A & 1B

Saturday, November 7, 2015

76. Exam prep guidelines

75. Lesson 2: GDP and the Business Cycle

74. An Economics lesson

Sunday, November 1, 2015

73 Adam Smith

James II was building a powerful militarised state on the assumption that the world's wealth was necessarily finite and empires were created by taking land from other states. The East India Company was thus an ideal tool to create a vast new English imperial dominion by warring with the Dutch and the Mogul Empire in India. After 1689 came an alternative understanding of economics, which saw Britain as a commercial rather than an agrarian society. The proponents of this view, most famously Adam Smith in 1776, argued that wealth was created by human endeavour and was thus potentially infinite. WIKIPEDIA:

72. Economics 1A - Slides

HERE ARE THE SLIDES used to explain the equilibrium point for a firm operating under perfect market conditions.

These were used on 14 March 2015.

71. Managerial Economics slides 31 October 2015 MANCOSA