MAYEXAMINATIONS2012ECONOMICSFORMANAGEMENT-Solutions-TIMEALLOWED:TwoHoursINSTRUCTIONSTOCANDIDATES.Readthequestionsandanyadditionalinstructionscarefully..Allquestionscarryequalmarks..Toreachthemaximumnumberofmarksyouhavetoidentifythecorrectoptionforallquestions.Eachquestionhasfiveoptionsandonlyoneofwhichiscorrect..Timeavailableis120minutes..Universityapprovedcalculatorsarepermitted.PAPERCODEECON722PAGE1OF10CONTINUED/ENDQuestion1Ifpropertyrightsareill-definedorabsent:a)consumersandfirmsfailtomakerationalchoices.b)resourcesareusedinefficiently.c)consumersnolongerpursuetheirself-interest.d)firmsnolongerstrivetomaximizeprofits.e)scarcityiseliminated.Question2Jaynehasjustbegunattendinguniversity.Whichofthefollowingshouldnotbeincludedintheopportunitycostofthisactivity?a)Tuitionfees.b)Thevalueofthemealssheconsumes.c)Thevalueofbooksshepurchasesforhermodules.d)Thewagesshecouldhaveearnedhasshenotgonetouniversity.e)Thevalueofanyequipmentsheisrequiredtobuyforhermodules.Question3Iftherewereafallinthepriceofsugar(aninputusedintheproductionofcandybars),thesupplycurveforcandybarswouldsifttothe_____,theequilibriumquantitywould______,andtheequilibriumpricewould_____.a)left;fall;riseb)left;fall;fallc)left;rise;falld)right;fall;risee)right;rise;fallQuestion4Asthepricerises,quantitydemandedfallsalonganindividualconsumer’sdemandcurvebecause:I.thehigherpriceencouragestheconsumertobuyfewerunitsofthegood.II.asthepricerises,consumersleavethemarket.Whichofthefollowingiscorrect?a)OnlyIapplies.b)OnlyIIappliesc)BothIandIIapply.d)NeitherIandIIapply.e)EitherIorIIcanapply,butnotsimultaneously.PAPERCODEECON722PAGE2OF10CONTINUED/ENDQuestion5IfthepriceofaproductincreasesfromGBP5.00toGBP5.50andasaresultthequantitysuppliedincreasesfrom200to240,thesupplyforthisproductinthispricerange:a)isperfectlyprice-inelastic.b)isprice-inelastic.c)hasapriceelasticityofunity.d)ispriceelastic.e)isperfec