Answer this question.
1 Private home ownership is increasing in China. For years the urban Chinese relied on
Overcrowded housing rented from the state and often waited a long time to have their own apartment. Now, with the increase in the market economy, the government is encouraging city dwellers to buy their own homes by giving cheap loans and tax-relief. Home buying will help China’s economy. New home-owners need to spend money on furniture, appliances and decorating. GDP grew by 8% in 1999, of which the housing industry contributed about a fifth. The housing changes will affect social and political issues as well as the economy. In the old system people had to live close to their work, and it was difficult to change jobs because no other housing was available. Single people had no hope of being allocated an apartment. Now anyone with money can buy a home and choose where they wish to live.
(a) Explain what is meant by the market economy. 
(b) Explain the meaning of complements and substitutes, giving an example of each from the passage. 
(c) Identify four factors that might influence a worker’s choice of occupation. 
(d) How far do you think the change in the provision of housing is likely to affect a worker’s choice of occupation? 
(e) Discuss whether the change in the provision of housing is likely to benefit everybody. 
Answer three questions.
Introduction The constant change in modern economy is a subject that has been discussed since the beginning of this module. It can’t be avoided and it became part of all types of business present in the current market. It is even correct to say that change is the most common characteristic among firms (John Olaghere, n.d.). Since companies cannot avoid changes, they need to prepare their ...
2 The most important status symbols for the emerging black middle class in South Africa are clothing and footwear, together with certain perfumes, hair-styles, cell-phones and household appliances. Some of these are expensive products that can be linked to a luxurious life style.
(a) According to economic theory, what determines the demand for a product? 
(b) Discuss why different income groups have different spending patterns. 
(c) What is meant by price elasticity of demand? 
(d) Discuss why the price elasticity of demand for the items mentioned in the article might differ. 
3 Some car manufacturers are multi-national companies with plants in several countries. These plants produce thousands of cars a year and are capital-intensive.
(a) Define the term ‘capital-intensive’. 
(b) Why are some organizations capital-intensive and others labor-intensive? 
(c) Identify three possible advantages for the car manufacturer of establishing production in another country. 
(d) Discuss how an increase in car production through the establishment of a new plant might affect a country’s Gross National Product. 
4 In 2001 it was announced that two German organizations responsible for training personnel were to merge to form a new organization with a staff of 900. It was said that this would make the organization more efficient.
(a) Why might companies spend money on training to increase the skills of their workforce? 
(b) Discuss whether the provision of education and training should be the responsibility of the government. 
(c) Explain why a merger might make an organization more efficient. 
(d) Explain whether you think large organizations are necessarily better organizations. 
5 The mining and export of minerals and precious stones is a very important part of the Namibian economy. It was reported that despite a sharp decrease in the quantity of these exports between 1995 and 1999 the export value of the items rose in that period.
(a) Where would the minerals and precious stones be recorded in the Namibian balance of payments? 
Definition of ‘Organization Of Petroleum Exporting Countries – OPEC’ An organization consisting of the world’s major oil-exporting nations. The Organization of Petroleum Exporting Countries (OPEC) was founded in 1960 to coordinate the petroleum policies of its members, and to provide member states with technical and economic aid. OPEC is a cartel that aims to manage the ...
(b) Discuss whether it is beneficial for a country to specialize in the production and export of a limited range of products. 
(c) The statement above says that the exports of minerals and precious stones decreased sharply yet the export value rose. How might this happen? 
(d) Discuss what measures a government might take to influence its country’s balance of
6 Expenditure in an economy may be either private expenditure or public expenditure.
(a) Explain the difference between these types of expenditure, giving one example of each. 
(b) Why might public expenditure fall if an economy comes to rely more on the market system? 
(c) Explain how public expenditure can be paid for. 
(d) Discuss, with examples, how decisions on public expenditure might illustrate the idea of opportunity cost. 
7 (a) Describe what differences might be found in the standard of living of the average person in a developed country compared with an average person in a developing country. 
(b) If a country had good natural resources, would the standard of living of its population
necessarily be high? 
(c) What policies might a government adopt in order to try to improve the standard of living in its country?