Part 1: MultiChoice (graded)
MC1. Suppose that your university tuition is $5,000 this semester and your books cost
$1,500. You can only work 20 rather than 40 hours per week during the 15 weeks you are
taking classes and you make $15 per hour. You will stay at your current accommodation,
which along with other living costs, would be $7,500 during this 15 week period. Your
opportunity cost of attending university this semester is
(d) $11,000
MC2. Assume that a higher proportion of young people from higher income families are
more likely to attend university than from low income families. Suppose that the government
reduces university fees to zero (for domestic students) this year. Consider the impact on
university enrolments (in percentage terms for a given group compared to the previous
year’s enrolments). The change
(b) may be higher or lower for young people from higher income families compared to low
income families, as while young people from higher income families are more likely to attend
university, a greater fraction of young people from higher income families are already
enrolled in university.
Part 2: Structured questions (graded)
Q1 Economic logic
a) It is purely coincidental that when John washes his car it rains- just by chance.
b) This is an incorrect inference. Just because it helped some people does not mean it
will help everyone. Not everyone’s grades will go up by that much
c) This is an example of correlation vs causation. Generally speaking recycling and
owning a hybrid car would be correlated- people that care about the environment will
recycle and own a hybrid. Recycling does not cause you to own a hybrid.
Q2 The competitive model
What are the essential elements of the basic competitive model?
- Rational, self-interested consumers
- Rational, profit maximizing firms
- Competitive markets with price taking behaviour
Q3 Plotting relationships
(a) state the value of intercept (a) and the slope (b) coefficient
1. a=1 b=2
2. a=-3 b=2
3. a=3.5833 b=-0.5833
4. a=-1.75 b=0.75
(b) calculate the value of Y when X is 5
