Download MBA YR1 EXAM Prep

EXAM PREPARATION WORKSHOP
Master of Business Administration
ECONOMICS
2011 INTAKE
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General Guidelines
1. Diagrams
1.1. Be able to draw diagrams.
1.2. Label the X & Y axis correctly.
1.3. Don’t forget to label point (zero) ‘0’ at X-Y
intersection.
1.4. Label points on the diagram.
1.5. Be neat!!!
Possible 4 marks per diagram!
General Guidelines
2. Answering of questions
2.1. Begin each question on a new page.
2.2. Refer to the points on your diagram.
2.3. Write your answers in point form.
2.4 Explain your answers with examples
3. Time management
3.1. Allocate time per question & stick to it.
3.2. Guide: 1.8 marks per minute
The circular flow of income and
spending in the economy
Discussion Questions
With aid of the circular flow of income and spending in the
economy diagram, describe how each participant in the
economy and the government interact with each other.
Briefly explain whether government participation in the
economy is essential to improve the standard of living of
the people.
The circular flow of income and
spending in the economy
Interactions of the participants
with government
• Consumers: government provide services to consumers
while consumers provide labour.
• Factor markets: government acquires resources in the
factor markets and also offers factors of production to
the factor markets.
• Business firms: government provides services to
business while business provide services to the
government.
• Product markets: governments acquires products from
the product markets and also provides product to the
product markets.
Interactions of the participants
with government
• International participants: the international market
provides products and factors of production that the
government utilises.
Government participation is essential to improve the
standard of living of people because government is the
largest employer and provides a number of essential
services.
Elasticity
Discussion Questions
Explain using examples, the following notations with
reference to price elasticity of demand.
Value
• n=0
• −1 < n < 0
• n = −1
• −∞ < n < −1
• n = −∞
Business Cycles
Discuss the various stages of business cycles your country
has experienced using a diagram.
Elasticity
• Elasticity is defined as a measure of the responsiveness
of demand to a change in price.
Value Meaning
• n = 0 Perfectly inelastic.
• −1 < n < 0 Relatively inelastic.
• n = −1 Unit (or unitary) elastic.
• −∞ < n < −1 Relatively elastic.
• n = −∞ Perfectly elastic.
Business Cycles
The basic stages are trough, expansion (boom /
upswing),contraction (down turn / recession)
• It is measured in Gross Domestic Product (GDP) .
Market Structures and
Macroeconomic Objectives
Discussion Question
Discuss whether government should always attempt to
eliminate monopolies in view of the inefficiencies and poor
products and service they usually provide.
Using your country as an example, discuss the five most
macroeconomic objectives which can be used to judge the
performance of the economy.
Monopoly
• Monopolies is a market situation in which a single firm
supplies goods and services to the entire market.
• Characteristics of monopolies
Negative effects of monopoly power using examples
• Higher prices
• Lower output
• Anti-competitive practices
• Possible exploitation of consumers
• Deliberate erection of barriers to entry
Monopoly
Positive effects of monopoly power using examples
• Firms grow by satisfying consumers
• Monopoly power reward for high quality/low prices
• Costs / Research and Development / Innovation
• New firms can enter if efficient enough and
• Monopoly power may lead to scale economies
Macroeconomics Objectives
• Discuss and critically evaluate using your country the
five most important macroeconomics objectives which
can be used to judge the performance of the economy.
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Full employment
Economic growth
Stability of prices
Balance of payments equilibrium
Equal and fair distribution
Aggregate Demand and
Demand
• Discussion Questions
• Describe the main components which constitute
aggregate demand.
• Using examples, explain any three factors that cause a
shift in the demand curve.
Aggregate Demand and
Aggregate Supply and Demand
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Main components of aggregate demand
Consumption (C)
Investment (I)
Government Spending (G)
Net Exports (X-M)
Aggregate Demand and
Aggregate Supply and Demand
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Three factors that cause a shift in the demand curve
Changes in income level
Prices of complementary / substitute products
Changes in the number of buyers
EXAMINATIONS DATES
• EXAM
• Date: 21 November 2011
• Time: 9:00 to 12:00
• SUPPLEMENTARY
• Date: 16 January 2012
• Time: 9:00 to 12:00
Questions Related to
Examination Preparations
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