A linear education production function was hypothesized and estimated for microeconomics principles at five South African universities. The main objective was to examine the contribution of three types of inputs to an individual student's performance on two output measures, namely the final Introductory Microeconomics exam at each university and a multiple-choice test of basic microeconomics concepts. Since the test was administered one month after students wrote the final exam, performance on the test also served as a measure of knowledge retention. The three categories of inputs included characteristics of the student and those of the student's peers and university attended. The inclusion of peer inputs and university inputs allowed for the testing of the impact of racial desegregation on student performance in microeconomics principles. Multiple regression analysis using ordinary least squares estimation was carried out. No consistent student race effects were found. Male students outperformed females on the final exam at all five universities. There was no gender disparity in regard to retaining economics knowledge however. Older students achieved significantly higher exam scores at the historically White universities. Students who reported spending more than three hours studying economics each week did better on the exam and retained more of that knowledge. Verbal ability and mathematical ability had large and significant effects on student achievement on both the exam and the test. Peer-race effects were found to be minor. Being in a class with more able peers, particularly more mathematically able, benefited an individual student. These benefits favored higher ability students to a greater extent. Although a higher proportion of males in the peer group tended to advantage individual males, the predicted coefficients were very small. Students who were attending the historically-White universities significantly outperformed those who were not. Although White students achieved higher test scores than other race groups at the historically-White universities, Non-white students at these universities outperformed their counterparts who were attending elsewhere. Desegregation has benefited non-Whites in terms of Economics achievement.
