grade 11 november 2014 economics p2

NATIONAL SENIOR CERTIFICATE

GRADE 11

NOVEMBER 2014

ECONOMICS P2

MARKS: 150 TIME: 1½ hours

This question paper consists of 12 pages.

*IECONE2*

2 ECONOMICS P2 (NOVEMBER 2014)

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INSTRUCTIONS AND INFORMATION 1. Answer FOUR questions as follows:

SECTION A: COMPULSORY SECTION B: Answer any TWO of the three questions. SECTION C: Answer ONE of the two questions.

2. Answer only the required number of questions. Answers in excess of

the required number will NOT be marked.

3. Answer the questions in full sentences and the format, content and the

context of your responses must comply with the cognitive requirements of the questions.

4. Number the answers correctly according to the numbering system used

in this question paper.

5. Write the question number above each answer. 6. Read ALL the questions carefully. 7. Start EACH question on a NEW page. 8. Leave 2–3 lines between subsections of questions. 9. Use only black or blue ink. 10. You may use a non-programmable pocket calculator. 11. Write neatly and legibly.

(NOVEMBER 2014) ECONOMICS P2 3


SECTION A (COMPULSORY) QUESTION 1 30 MARKS – 15 MINUTES 1.1 Various options are provided as possible answers to the following

questions. Choose the correct answer and write only the letter (A–C) next to the question number (1.1.1–1.1.8) in the ANSWER BOOK, for example 1.1.9 C.

1.1.1 The decline in satisfaction due to an additional consumption of a

product/service is referred to as … A diminishing utility. B marginal utility. C excessive utility. 1.1.2 An increase or decrease in quantity demanded due to changes in

income is referred to as … of demand. A price elasticity B supply elasticity C income elasticity 1.1.3 One of the following phrases depicts demand relationships

between substitutes: A Increase in price of a product and an increase in demand of

the substitute product. B Decrease in price of a product and increase in demand of the

substitute product. C Decrease price of a product and a decrease in demand of the

substitute product. 1.1.4 The extra cost of producing an additional unit is referred to as … A average variable cost. B variable cost. C marginal cost. 1.1.5 One of the following is not an effect of poverty: A High population growth B Increased crime reports C Excessive economic choices 1.1.6 Increased co-operation between countries results in the formation

of … A trade blocks. B building blocks. C banking blocks.



1.1.7 One of the following is an institution of globalisation: A Umsobomvu Youth Fund B International Monetary Fund C South African Institute of Chartered Accountants 1.1.8 ... is one of the causes of environmental deterioration. A Less emission of CO2 B Limited use of natural resources C Excessive consumption (8 x 2) (16) 1.2 Choose a description in COLUMN B that matches an item in COLUMN A.

Write only the letter (A–J) next to the question number (1.2.1–1.2.8) in the ANSWER BOOK, for example 1.1.9 K.

COLUMN A COLUMN B 1.2.1 Absolute poverty A facilitates international trade

agreements, tariff policies probation of intellectual property

1.2.2 Regionalisation B price multiplied by quantity 1.2.3 WTO C responsiveness of quantity

demanded of one good to a change in the price of another good

1.2.4 COP 17 D European Union, BRICS, NAFTA 1.2.5 Cross elasticity E prevents an entrepreneur from

closing the business down 1.2.6 Normal profit F people being unable to take care of

their basic needs 1.2.7 Unrelated goods G was held in South Africa 1.2.8 Total revenue H zero elasticity of demand I Brazil J people being relatively able to take

care of their basic needs (8 x 1) (8)



1.3 Give the correct concept for each of the following phrases. 1.3.1 A process by which land becomes very dry and it can no longer

sustain crops or vegetation 1.3.2 A process where the economies of countries become more

connected to one another 1.3.3 Percentage change in quantity demanded is equal to percentage

change in price 1.3.4 A positive difference between total revenue and total cost 1.3.5 A situation that exists when a firm is able to divide its costs over

higher levels of outputs 1.3.6 Extra profit that the owner receives above the minimum payment

required by the owner of the firm to stay in business (6 x 1) (6) TOTAL SECTION A: 30



SECTION B Answer any TWO of the three questions from this section in the ANSWER BOOK. QUESTION 2: MICROECONOMICS 40 MARKS – 20 MINUTES 2.1 Answer the following questions. 2.1.1 List any TWO factors determining the price elasticity of demand.

(2 x 1) (2) 2.1.2 Explain the law of diminishing returns. (1 x 2) (2) 2.2 Study the scenario below and answer questions that follow. In January a small pizza shop received 350 boxes of Margharita pizzas and

200 boxes of cheese from its supplier. They sold each box of Margharita pizzas at R30 and a box of cheese at R35. The following month (February) pizza prices increased to R42 for Margharita and R49 for cheese. In the same month (February) the supplier increased the number of boxes supplied from 350 to 441 boxes for Margharita pizzas and from 200 to 252 boxes for cheese.

2.2.1 Define price elasticity of supply. (2) 2.2.2 Calculate the elasticity of supply for cheese. (6) 2.2.3 Explain any challenge that may be experienced by producers when

they have to increase supply in the short run. (1 x 2) (2)



2.3 Study the graph below and answer questions that follow.

2.3.1 Describe complementary products. (2) 2.3.2 In your answer book, copy the graph for Good Y and illustrate

graphically the impact of an increase in price (from P0 to P1) of Good X on the complementary Good Y. (6)

2.3.3 Why is it important to the producer to understand the relationship

between compliments? (2) 2.4 Briefly discuss any TWO characteristics of utility. (8) 2.5 Explain the importance of price elasticity of demand to producers. (8) [40]

0 Q1 Q0 Quantity 0 QO Quantity

P1

P0

Price S1 S0

D0

S0

P0

Price Good X Good Y



QUESTION 3: CONTEMPORARY ECONOMIC ISSUES

40 MARKS – 25 MINUTES 3.1 Answer the following questions. 3.1.1 List any TWO global actions on protecting the environment. (2 x 1) (2) 3.1.2 Explain absolute advantage. (1 x 2) (2) 3.2 Study the picture below and answer the questions that follow.

3.2.1 What does the above picture depict? (2) 3.2.2 What may be the cause of the above scenario? (2 x 2) (4) 3.2.3 Which provinces are most hit by the scenario depicted by the picture

above? (2 x 2) (4)

http://www.google.co.za/imgres?imgurl=http://www.toonpool.com/user/82/files/poverty_460995.jpg&imgrefurl=http://www.toonpool.com/cartoons/poverty_46099&h=358&w=500&tbnid=HcQPZl_mN4l7zM:&zoom=1&docid=_fP94abZFP6zNM&ei=hgB6U-fDMOfe7AbVr4GwAQ&tbm=isch&ved=0CIgBEDMoITAh&iact=rc&uact=3&dur=7581&page=3&start=30&ndsp=21



3.3 Study the cartoon below and answer the questions that follow.

3.3.1 Explain the message portrayed by the picture above. (2) 3.3.2 From the picture, name the continent that is in the hands of the short

man. (2) 3.3.3 Briefly explain any TWO factors contributing to the above scenario.

(2 x 3) (6) 3.4 Briefly discuss any TWO characteristics of globalisation. (2 x 4) (8) 3.5 Analyse any FOUR ways that can be used by the South African government

to alleviate poverty. (8) [40]



QUESTION 4: MICROECONOMICS AND CONTEMPORARY ECONOMICS

ISSUES 40 MARKS – 20 MINUTES 4.1 Answer the following questions. 4.1.1 List TWO objectives of business. (2 x 1) (2) 4.1.2 Define explicit costs. (1 x 2) (2) 4.2 Study the graph below and answer the questions that follow.

4.2.1 Give any TWO examples of variable costs. (2) 4.2.2 Explain the shapes of the average total cost (ATC), average variable

cost (AVC), and marginal cost (MC). (6) 4.2.3 Why are average total costs important? (2)



4.3 Read the following extract and answer the questions that follow. BRICS (DURBAN 2013)

BRICS as it is known globally, is a group of leading emerging economies playing a key role in the world development platform. South Africa’s President Jacob Zuma hosted the Fifth BRICS Summit on 27 March 2013 in Durban under the theme: “BRICS and Africa: Partnership for Development, Integration and Industrialisation.” BRICS leaders reaffirmed their support for sustainable infrastructure development, as well as industrial development, job creation, skills development, food and nutrition security and poverty eradication and sustainable development in Africa. BRICS countries accepted to establish BRICS bank to fund infrastructure projects of these nations. However, countries failed to achieve consensus on quantum of seed money. China wanted it to be $100 billion which is to be contributed equally by the member nations.

[Adapted: http://www.gr8ambitionz.com/2013/03/brics-summit-2013- highlights.] 4.3.1 Each letter in BRICS represents a country. Name them. (5) 4.3.2 What, do you think, is the main purpose of BRICS? (2) 4.3.3 According to the extract, what are the agreements that were made in

Durban? (3 x 1) (3) 4.4 Distinguish between product markers and factor markets. (8) 4.5 Explain the implication of ‘non price competition’ in oligopolies. (8) [40] TOTAL SECTION B: 80

http://www.gr8ambitionz.com/2013/03/brics-summit-2013-%20highlights.



SECTION C Answer any ONE of the two questions from this section in the ANSWER BOOK. Your answer will be assessed as follows: STRUCTURE OF THE ESSAY MARK ALLOCATION Introduction Max. 2 Body Main part: Discuss in detail/In-depth discussion/ Examine /Critically discuss /Analyse/Compare/ Evaluate/Distinguish/ Explain/Assess/Debate Max. 26 Additional part: Give own opinion/Critically discuss/Evaluate/Critically evaluate/Draw a graph and explain/Use the graph given and explain/Complete the given graph/Calculate /Deduce/Compare/Explain/ Distinguish/Interpret/Briefly debate Max. 10 Conclusion Max. 2 TOTAL 40 QUESTION 5: MACROECONOMICS 40 MARKS – 35 MINUTES Discuss in detail the characteristics of a perfect market. (26) Briefly highlight how the perfect market differs from that of a monopolistic market. (10) [40] QUESTION 6: INFLATION 40 MARKS – 35 MINUTES “The environment is a precious resource of which as members of society we are duty bound to take good care of it.” Fully explain the various methods of protecting the environment. (26) Highlight the impact of environmental degradation to our economy and society. (10) [40]

TOTAL SECTION C: 40 GRAND TOTAL: 150

NATIONAL SENIOR CERTIFICATE

GRADE 11

NOVEMBER 2014

ECONOMICS P2 MEMORANDUM

MARKS: 150

This memorandum consists of 13 pages.



SECTION A (COMPULSORY) QUESTION 1 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 A (Diminishing utility) √√ 1.1.2 C (Income Elasticity) √√ 1.1.3 A (Increase in price of a product and an increase in demand of

the substitute product) √√

1.1.4 C (marginal cost) √√ 1.1.5 B (Increased crime reports) √√ 1.1.6 A (trade blocks) √√ 1.1.7 B (International Monetary Fund) √√ 1.1.8 C (Excessive consumption) √√ (8 x 2) (16) 1.2 MATCHING ITEMS 1.2.1 F (People being unable to care of their basic needs) √ 1.2.2 D (European Union, BRICS, NAFTA) √ 1.2.3 A (Facilitates international trade agreements, tariff policies and

probation of intellectual property) √

1.2.4 G (Was held in South Africa) √ 1.2.5 C (Responsiveness of quantity demanded of one good to a

change in price of another good)

1.2.6 E (Prevents an entrepreneur from closing the business down) √ 1.2.7 H (Zero elasticity of demand) √ 1.2.8 B (Price multiplied by quantity) √ (8 x 1) (8) 1.3 1.3.1 Desertification √ 1.3.2 Globalisation √ 1.3.3 Unit elasticity/elasticity of one√ 1.3.4 Profit √ 1.3.5 Economies of scale √ 1.3.6 Economic profit √ (6 x 1) (6) TOTAL SECTION A: 30



SECTION B QUESTION 2 2.1 2.1.1 x Availability of close substitutes √√

x Nature of products √√ x Habit forming products √√ x Proportion of income spent on the products √√ x Durability of the product √√ x Time √√ x Possible uses √√ x Degree of necessity or luxury √√ (2 x 1) (2)

2.1.2 Explain the law of diminishing returns.

Law of diminishing returns states that as more of a variable input is added to a fixed input, the returns from the variable input will decrease. √√ (1 x 2) (2)

2.2 2.2.1 Price elasticity of supply measures the responsiveness of quantity

supply to changes in price. √√ (2) 2.2.2 PES =( change in quantity supplied

change in price) √

Percent change in price of cheese

= (R R R

) x √ Percent change in quantity supplied of cheese = (

) x √

PES = ( ) √ = 0,65 √√ (6)

2.2.3 x Fixed inputs do not change in the short run; therefore a supplier is

able to increase output using only the variable inputs. √√ x A fixed factor of production such as land and other specialised

capital equipment is expensive. √√ (1 x 2) (2) 2.3 2.3.1 Complementary products are different products that are used together

at the same time to satisfy a need or want, √√ e.g. tennis ball and a tennis racquet.√ (Accept any relevant example)

(Definition 2 marks, example only 1 mark) (2)



2.3.2

(6) 2.3.3 x Enables producers to predict what impact a change in the price of

compliments will have on the demand for their product. √√ x They will then be able to implement measures to counteract the

effect of price change in an effort to try and maximise their profit. √√

x That is cost effective measures like producing more output with the same amount of input. √√ (Any 1 x 2) (2)

2.4 x Satisfaction is abstract because utility cannot be measured √√ – there is

no standard way to measure someone’s satisfaction or utility, so economists sometimes simply assign it and value a call the measurement “utils”. √√

x Utility is subjective √√ – because it differs from person to person, √√ – the satisfaction two people get from consuming the same product differ depending on personal preferences √√ e.g. some people will find that ice cream has a high utility, while others would prefer to have cold drinks. √√

x Utility differs from one situation to the other / (from time to time) √√ – i.e. warm clothes provide satisfaction in winter as opposed to summer. √√

x Utility differs from place to place√√ – a swimming costume will be satisfying at the beach but not in the classroom. √√ (2 x 4) (8)

2.5 x Tells a producer that for every action there is a reaction. √√

x By studying price elasticity of demand, we can predict what the change in price will be for the producers. √√

x Price elasticity of demand is useful to help firms decide how to increase their total revenue. √√

x To increase its total revenue the producer can (1) raise the price to get more revenue per product; √√ and ( ) drop the price to increase the quantity sold. √√

x If the buyers are sensitive to the price (elastic demand), they will buy more if the price drops, √√ so the producers should drop the price. √√



x If the buyers are not sensitive to price (inelastic demand) they will not buy

much less even if the price goes up, √√ so the producers should increase the price. √√

x To increase sales, raise the price when the demand is inelastic, √√ or drop the price when the demand is elastic. √√

x Producers want to know how sensitive the market supply is to a change in the price of the product. √√ (4 x 2) (8)

[40] QUESTION 3: CONTEMPORARY ECONOMIC ISSUES 3.1 3.1.1 x World summit on Sustainable Development 2002 √

x The Kyoto Protocol √ x The millennium development goals √ (2 x 1) (2)

3.1.2 Absolute advantage refers to the ability of an individual, business, or

country to produce more of a good or a service than competitors can, using the same amount of resources. √√ (Accept any relevant definition.) (1 x 2) (2)

3.2 3.2.1 Depicts poverty. √√ (2) 3.2.2 x Unemployment: Diseases decrease the amount of work that ill

people can do, reducing their income and driving them deeper into poverty. √√

x Lack of education: It keeps people from obtaining decent jobs that would lift them and their families out of poverty. √√

x Global financial crisis: Poor countries do not have money for investments which are important for development and growth; this widens the gap between the rich and the poor. √√

x Lack of productive resources: In poor countries, there are not enough productive resources to ensure sustainable livelihoods. √√

x Dysfunctional governments: Many governments have created their own misfortunes, and lack of physical and social infrastructure can be crippling for the poor. √√

x Environment and climate change: Increasing drought, flooding and changing climate patterns demand a shift in in crops and farming practices that people may not be able to make easily. Poor people are ill-equipped to deal to adapt to changing rainfall patterns. √√

x War and conflict: A large portion of today’s global poverty is found in war torn and post conflict countries. (Any 2 x 2) (4)

3.2.3 Eastern Cape √√

KwaZulu-Natal √√ (4)



3.3 3.3.1 x North/South divide √√

x Countries of the South have less industries than those of the North while those in the South are dependent on countries of the North. √√

(Accept any relevant response.) (1 x 2) (2) 3.3.2 Africa √√ (2) 3.3.3 x Capitalism: √ Is known to lead to inequality because it is based on

the profit motive and the accumulation of wealth. √√ x Globalisation: √ Leading cause of inequality across the world.

Some developed countries exploit poor countries to a point where developing countries become dependent on developed countries for survival. √√

x Immigration: √ When immigration patterns between countries are uneven, it leads to inequality. √√

x Rate of development: √ Countries of the North and South have different levels of economic growth. A slow rate of development refers to developing or under-developed countries in the South, while a high rate refers to development refers to the North. √√

x Emergence of economic powers: √ Developed countries with access to capital obtain economic power. They can produce goods most efficiently, develop and produce new technologies, and export most goods to the other countries. √√ The competition between emerging power economies makes it difficult for developing economies to survive. √√

x International infrastructure: √ Countries of the North have the most transport systems. √√ International communications network are almost completely under the control of the countries of the North and the South pays heavily for these services. √√

x New technologies: √ The research, development and production of new technologies are in the hands of large corporations in the North. √√

x Financial aid and debt: √ Many countries in the South obtained funds or credit from wealthy countries in the North, usually at high interest rates. √√ These high interest rates cause debt to accumulate, borrowers end up paying out more than they receive in the form of investments. √√ (Any 3 x 2) (6)



3.4 Briefly discuss any TWO characteristics of globalisation. x Global market established √√ where goods and services can be

exchanged freely between countries. √√ x Trade has become open √√ as trade barriers such as tariffs have been

removed. √√ x Globalisation encourages free flow of investment √√ between countries

and there is free movement capital and finance across the world. √√ x Economic integration √√ is necessary and no country can survive on its

own; different countries and economies are interdependent. √√ x The movement of people and goods √√ across the national borders is

facilitated by the development of transport and communication. √√ x All countries have access to cheapest and best quality √√ products. x Giant international co-operations play a very important role in world

trade. √√ (Any 2 x 4) (8) 3.5 Analyse any FOUR ways that can be used by the South African government

to alleviate poverty. x Basic income security: √ Providing safety nets. √

x Basic services √ and other non-financial transfers and other non-financial transfers in the form social wages and grants consisting of free basic municipal services. √

x Social inclusion initiatives: √ To ensure an inclusive society. √ x Human resource development: √ Investment in health and education. √ x Creation of economic opportunities: √ To ensure that the economy

creates chances for poor households to earn improved incomes. √ x Access to assets √ Particularly housing, land and capital including public

infrastructure. √ x Improving health care: √ Ensuring that poor children grow up healthy. √ x Environmental sustainability: √ Reversing environmental degradation,

promoting ecotourism, responding to climate changes and encouraging efficient and sustainable exploitation of the environment. √

x Good governance: √ Direct intervention in the provision of information of information, facilitating participatory democracy, pro-poor policies and Sound macro-management and partnerships/solidarity. √ (4 x 2) (8)

[40]



QUESTION 4: MICROECONOMICS AND CONTEMPORARY ECONOMIC

ISSUES 4.1 4.1.1 x To make profit √

x Survival of the business √ x Maximising revenue √ x Maximising sales √ x Setting targets for growth √ (2 x 1) (2)

4.1.2 Explicit costs are all the expenses that a business has to pay for the

use of the factors of production. √√ (2) 4.2 4.2.1 Give any TWO examples of variable costs.

x Electricity √ x Water √ (Accept any relevant answer) (2)

4.2.2 Explain the shapes of the average total cost (ATC), average variable

cost (AVC) and marginal cost (MC) x The MC, AVC and ATC are U-shaped. √√ x As the number of units increase from zero, they start at high

values √√ decline at decreasing rate reach minimum points √√ and then increase at increasing rates. √√

x Marginal cost also cuts average total cost an average variable cost at their minimum values. √√ (Any 3 x 2) (6)

4.2.3 Why are average total costs important?

Average total costs are important because: x They give the cost per unit √√ x They are used to determine (when compared to average

revenue). √√ (Any 1 x 2) (2) 4.3 4.3.1 B – Brazil; √ R– Russia; √ I– India; √ C – China; √ S – South Africa √ (5) 4.3.2 The main purpose is to expand inter-trade amongst member (BRICS)

countries. √√ (2) 4.3.3 According to the extract, what are the agreements that were made in

Durban? x Re-affirmed their support for sustainable infrastructure

development, as well industrial development √ x Job creation √ x Skills development √ x Food and nutrition security √ x Poverty eradication √ x Sustainable development in Africa √ (Any 3 x 1) (3)



4.4 Distinguish between product and factor markets Factor markets:

x Market for factors of production. √√ x Each factor of production is sold in a different market. √√ x The price of each factor of production is determined through the interaction

of demand and supply. √√ x If the supply of one factor of production changes, it affects the rest of the

factor market as well as the product market. √√ Product market:

x Market for goods and services. √√ x Product market is divided into capital goods market, consumer goods

market and the service market. √√ x If demand for a product or a service increases, the demand for factors of

production will also increase in the factor market. √√ x A change in the product market influences demand in other markets. √√ (8)

4.5 Explain the implication of ‘non-price competition’ in oligopolies. x Oligopolies tend not to compete in terms of the price of products. √√

x Businesses normally engage in non-price competition such as advertising, product differentiation, to gain market share. √√

x They try to distinguish their products from those of other businesses in order to gain a competitive advantage. √√

x Businesses try to avoid price competition as this could lower the profitability of the different businesses. √√

x Forms of non-price competition include: building brand loyalty; √√ extended shopping hours; √√ doing business over the internet; √√ after sales service; √√ loyalty rewards to customers; √√ etc. (4 x 2) (8)

[40] TOTAL SECTION B: 80



SECTION C Answer any ONE of the TWO questions from this section in the ANSWER BOOK. STRUCTURE OF ESSAY MARK ALLOCATION Introduction Max. 2 Body Main part: Discuss in depth/In-depth discussion/Examine/Critically discuss/Analyse/Compare/ Evaluate/Distinguish/Explain/Assess/Debate

Max. 26

Additional part: Give own opinion/Critically discuss/Evaluate/Critically evaluate/Draw a graph and explain/Use the graph given and explain/Complete the given graph/Calculate/ Deduce/Compare/Explain/ Distinguish/Interpret/Briefly debate

Max. 10

Conclusion Max. 2 TOTAL Max. 40 QUESTION 5: MICROECONOMICS Discuss in detail the characteristics of perfect markets. Briefly highlight how it differs from monopolistic markets. INTRODUCTION Perfect markets are markets where neither the individual producer, nor individual consumer has an impact on price. There is no preference where one buys or sells the product, because all the products are the same. √√

(Accept any relevant introduction) (2) BODY Characteristics of perfect markets Large number of buyers and sellers √ exist who cannot control price: there are many buyers and sellers in the market in that everyone is a price-taker. √√ No individual buyer or seller can influence price. √√ Products are homogenous: √ This means products are of the same type, quality and appearance. √√ The market is impartial and impersonal: √ No seller has an advantage over the other, buyers do not mind from whom they buy from. √√ Freedom of entry and exit: √ The market is totally accessible, no legal, financial nor technological barriers can hinder the freedom of entry and exit from the market. √√ Buyers and sellers have complete/perfect knowledge: √ Buyers have complete knowledge about the price, quality and availability of goods and services. √√ Sellers have complete knowledge about production costs market opportunities. √√ If sellers raise prices buyers will know and will buy from a supplier still charging lower prices. √√ There is high output and large choice: √ Due to many sellers, consumers can shop around and buy from whomever they want. √√ There are no shortages because if one seller runs out, plenty of other sellers still exist. √√



Unregulated markets: √ An unregulated market means that the government does not interfere in the market. Decisions are left to individual producers and suppliers as well as buyers. No collusion: √ Occurs when sellers or buyers enter into an agreement/arrangement to limit competition. √√ (Any 26) (26) ADDITIONAL PART Briefly highlight how it differs from monopolistic markets. x The many sellers in a monopolistic market have market power unlike those in a

perfect market. √√ x Products sold in a monopolistic market are differentiated. √√ x Products are therefore heterogeneous √√ unlike in the case of perfect market

where the products are homogeneous. √√ x Differentiated products differ from each other based on differences in ingredients,

packaging, trademarks, colour, sometimes even shape or sometimes form. √√ x Since firms sell heterogeneous products, they have some control over the price

of the product √√ and are price makers whereas they are price takers in a perfect market. √√

x The demand curve of a monopolistic competitive firm is downward sloping while the one of a perfect competitive firm is horizontal. √√ (Any 10) (10)

CONCLUSION Perfect markets are really rare, and there is a very thin line between perfect markets and monopolistic markets. √√ (Accept any relevant conclusion.) (2) [40] QUESTION 6 The environment is a precious resource of which as members of society we are duty bound to take good care of it. Fully explain the various methods that can be used to protect the environment. Highlight the impact of environmental degradation to our economy and society. INTRODUCTION Planet earth will not be able to sustain future generations if society, government, businesses, rich and poor countries do not come together and be creative about ways of taking care of the environment. √√ (Accept any relevant introduction) (2) BODY x Technological innovations/Using new technology √√ focus on economic

growth while trying to contain pollution. √√ x Replace fossil fuels with sustainable energy sources √√ such as wind, tide

movement, wave movement, sun energy and hydro energy etc. √√ x Improve efficiency in the use of scarce resources √√ in production processes

and to develop systems to reduce waste in all forms such as recycling. √√ x Develop processes to treat industrial waste √√ and to control its disposal. √√



x Provide specifications to product developers √√ to produce substitute goods

that are environmentally friendly i.e. .degradable containers. √√ x Price policy: √√ This is about increasing the price of non-renewable resources

to avoid the inefficient use of these resources.√√ x To restrict supply and increase price to reduce demand of fossil fuels, √√

people will therefore switch to renewable resources. √√ Price policy can also be used to make industries pay a pollution levy or emission fee for any pollution they may cause. √√

x Public opinion: √√ Public opinion comes from formations such as pressure groups and environmental organisations, who lobby for environmental protection. √√ Governments and businesses are forced to take note of the public opinion that these pressure groups express. √√

x Government action: √√ The department of environmental affairs takes the lead in environmental matters ,and does the following to try and protect the environment: √√ National Marine Week, People and Parks Conference, Clean Fires Campaign, global and environmental change websites for information, waste management, etc. √√

x Passing of laws: √√ Conference and the Waste Management Act.√ √ The South African government has passed the following laws: Air Quality Management Act, Act 39 0f 2004, Biodiversity Act, Act 10 2004, Waste Act, Act 59 of 2008 provide for reduced generation and environmental impact of all forms of waste.√√ Integrated Coastal Management Act 24 of 2008. √√

x Vehicle emissions reduction: √√ The Copenhagen Climate council issued a warning to the world that there should be a reduction in carbon emissions otherwise there would be irreversible changes in climate. √√ (Any 26) (26)

ADDITIONAL PART Highlight the impact of environmental degradation to our economy and society. x Increased air pollution: √ Increasing air pollution and declining air quality are

harming people’s health. √√ x Increased soil erosion √ x Increased consumption of natural capital: √ South Africa is using up its

natural capital due to overconsumption. √√ x Increased loss of biodiversity. √ x Climate change: √ The main causes of climate change and global warming, in

particular, namely the increased burning of fossil fuels such as gasoline and coal. √√

x Deteriorating freshwater resources. √√ (Any 10) (10)



CONCLUSION It is essential that all sectors of the economy take care of the environment, for all future generations to enjoy, as much as resources are needed for production, care should be taken and they should be used sparingly. √√ (Accept any relevant conclusion.) (2) [40]

TOTAL SECTION C: 40 GRAND TOTAL: 150

grade 11 november 2014 economics p2

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