GAUTENG DEPARTMENT OF EDUCATION
PREPARATORY EXAMINATION
2016
10732
ECONOMICS
SECOND PAPER
TIME:
2 hours
MARKS: 150
12 pages
1
P.T.O.
ECONOMICS
(Second Paper)
10732 / 16
2
GAUTENG DEPARTMENT OF EDUCATION
PREPARATORY EXAMINATION – 2016
ECONOMICS
(Second Paper)
TIME: 2 hours
MARKS: 150
INSTRUCTIONS AND INFORMATION
1.
Answer FOUR questions as follows in the ANSWER BOOK:



SECTION A: COMPULSORY
SECTION B: Answer any TWO of the THREE questions.
SECTION C: Answer any ONE of the TWO questions.
2.
Answer only the required number of questions. Answers in excess of the
required number of questions will NOT be marked.
3.
Number the answers correctly according to the numbering system used in this
question paper.
4.
Write the number of the question above each answer.
5.
Read the questions carefully.
6.
Start the answer to each question on a NEW page.
7.
Leave 2 – 3 lines between sub-sections of questions.
8.
Answer the questions in full sentences and ensure that the format, content
and context of your responses comply with the requirements of the questions.
9.
Use only blue or black ink.
10.
Non-programmable pocket calculators may be used.
11.
Write neatly and legibly.
P.T.O.
ECONOMICS
(Second Paper)
10732 / 16
3
SECTION A (COMPULSORY)
30 MARKS – 20 MINUTES
QUESTION 1
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.
1.1.1
A patent which gives one the exclusive right to manufacture a
product is characteristic of a / an … monopoly.
A
B
C
1.1.2
A market which has major government influence and control can
be described as being …
A
B
C
1.1.3
MC = AVC.
MR = AC.
MC = MR.
A monetary measure to control inflation is ...
A
B
C
1.1.6
variable
explicit
implicit
As a rule, a firm should consider shutting down its business at the
point where ...
A
B
C
1.1.5
unregulated.
regulated.
deregulated.
The value of inputs owned by the entrepreneur and used in the
production process is known as ... costs.
A
B
C
1.1.4
artificial
natural
local
the tax rate.
the interest rate.
VAT.
The organisation responsible for marketing South Africa as a
tourist destination is ...
A
B
C
SATOUR.
the Department of Tourism.
Tours in advance.
P.T.O.
ECONOMICS
(Second Paper)
1.1.7
condensation.
co-operation.
conservation.
The adoption of a specific range in which monetary authorities
control the increase in prices is known as …
A
B
C
price hikes.
inflation targeting.
price control.
(8x2)
1.2
4
A strategy aimed at achieving the sustainable use and
management of natural resources is referred to as …
A
B
C
1.1.8
10732 / 16
(16)
Choose a description from COLUMN B that matches an item in COLUMN A.
Write only the letter (A – I) next to the question number (1.2.1 – 1.2.8) in the
ANSWER BOOK.
1.2.1
COLUMN A
Normal profit
1.2.2
Merit goods
1.2.3
Pareto efficiency
1.2.4
Duopoly
1.2.5
Headline inflation
1.2.6
Indigenous
Knowledge System
(IKS)
1.2.7
Preservation
1.2.8
Biodiversity
A
COLUMN B
An index that measures the price of a fixed
“basket” of goods and services
B
When it is impossible to increase one’s
welfare without decreasing the welfare of
another
C
Two businesses that have all the power in
a specific market
D
The number of organisms found within a
specified geographic region
E
Monopolists are seen as friendly to
competition
F
To keep something intact
G Average revenue = average cost
H
Normally under-produced in a market e.g.
education
I
Traditional ways of doing that which is
unique to a given culture or society (8x1)
(8)
P.T.O.
ECONOMICS
(Second Paper)
1.3
10732 / 16
5
Identify the concept described in each of the following statements. Write only
the term next to the question number (1.3.1 – 1.3.6) in the ANSWER BOOK.
1.3.1
The selling of goods or services to different buyers at different
prices
1.3.2
Prices that are set below equilibrium price in the market and which
allow the poor greater access to goods and services
1.3.3
The additional cost incurred when production is increased by one
more unit
1.3.4
Low growth, high unemployment and high inflation rates occur
simultaneously
1.3.5
South Africans travelling to other countries
1.3.6
The ability to satisfy the needs of the present generation without
compromising the needs of future generations
(6x1)
(6)
TOTAL SECTION A:
30
P.T.O.
ECONOMICS
(Second Paper)
10732 / 16
6
SECTION B
Answer TWO of the three questions from this section in the ANSWER BOOK.
QUESTION 2
2.1
Answer the following questions.
2.1.1
2.1.2
2.2
40 MARKS – 30 MINUTES
MICRO-ECONOMICS
Name TWO segments (elasticities) of the kinked demand curve of
the oligopolist.
(2x1)
(2)
How can a dominant firm in the oligopolistic market influence the
price of goods?
(1x2)
(2)
Study the graph below and answer the questions that follow.
EQUILIBRIUM IN A MONOPOLY MARKET
LAC
Price
Cost
Revenue
150
LMC
f
c
100
90
g
a
d
50
b
MR
50
60
DD/AR
Quantity
2.2.1
The above equilibrium position indicates a (short / long) run.
(1)
2.2.2
Indicate the profit maximization point.
(1)
2.2.3
Why will the monopolist produce at quantity 50 instead of quantity
60?
(2x2)
(4)
Calculate the profit or loss of this monopolist. Show ALL
calculations.
(4)
2.2.4
P.T.O.
ECONOMICS
(Second Paper)
2.3
10732 / 16
7
Read the article below and answer the questions that follow.
Competition Commission raids glass companies in collusion investigation.
The Competition Commission has begun an investigation into alleged collusive
conduct involving Glasfit, PG Glass, Shatterprufe and Digicall. This is typical
cartel behaviour.
Shatterprufe allegedly supplied PG Glass and Glasfit with automotive glass, while
Digicall processed automotive glass-related insurance claims on behalf of PG
Glass and Glasfit.
The investigation pertains to claims made by some independent glass fitment
operations, alleging that PG Glass carried out collusive activities preventing
competition in the automotive glass repair and fitment market.
[Adapted from www. bdlive.co.za, 23 March 2016]
2.3.1
Name the organisation that investigates anti-competitive behaviour
of companies in South Africa.
(1)
What anti-competitive conduct was investigated, according to the
extract?
(1)
2.3.3
Briefly discuss the term cartel.
(2)
2.3.4
What corrective measures can be instituted against these
companies if they were found guilty?
(2)
How can the collusive behaviour of these glass companies affect
the economy?
(2x2)
(4)
Explain the reasons why a cost-benefit analysis is done when undertaking a
project.
(4x2)
(8)
2.3.2
2.3.5
2.4
2.5
How can firms in a monopolistically competitive market increase their market
share?
(4x2)
(8)
[40]
P.T.O.
ECONOMICS
(Second Paper)
QUESTION 3 CONTEMPORARY ECONOMIC ISSUES
3.1
8
40 MARKS – 30 MINUTES
Answer the following questions.
3.1.1
3.1.2
3.2
10732 / 16
Name TWO items excluded from the CPI basket of goods when
calculating core inflation.
(2x1)
(2)
Why are some plants or animals listed as endangered?
(2)
(1x2)
Study the cartoon below and answer the questions that follow.
THE EFFECT OF INFLATION ON WAGES
Eish!!! This inflation
is way above the
target in South
Africa.
[Adapted https: // app.hedgeye.com / insights / 36953]
3.2.1
What is the inflation target in South Africa?
(2)
3.2.2
What is cost-push inflation?
(2)
3.2.3
What is the effect of inflation on wages?
(2)
3.2.4
What can the government do to influence the impact of salary
increases on inflation?
(2x2)
(4)
P.T.O.
ECONOMICS
(Second Paper)
3.3
10732 / 16
9
Read the article below and answer the questions that follow.
Eskom factor – CO2 and climate change
During the 2011 financial year, 93% of the electricity that Eskom produced
was generated from coal-based power plants. These stations were built to
utilise a low-cost and plentiful local resource and to be capable of burning
lower-quality coal, leaving better coal for use by industry or as exports.
However, using coal to generate electricity results in a significant
environmental footprint.
Greenhouse gas emissions from the electricity sector are estimated to be
around 45% of South Africa’s emissions. When benchmarking Eskom’s
carbon footprint against a set of seven leading developed and developing
economies, Eskom ranks as the second-highest emitter of CO2.
[Source:www.eskom.co.za]
3.3.1
What resource is mainly used to generate electricity in South
Africa?
(1)
3.3.2
How much is Eskom’s greenhouse contribution in South Africa?
(1)
3.3.3
What is a carbon footprint?
(2)
3.3.4
How do greenhouse gas emissions affect climate change?
(2)
3.3.5
Why do you think it is difficult for Eskom to reduce its
environmental footprint while still generating electricity for the
country?
(2x2)
(4)
3.4
Explain the impact of inflation on debtors and creditors.
(2x4)
3.5
Why are chemical waste and hazardous waste two of the world’s biggest
concerns in terms of environmental sustainability?
(2x4)
(8)
(8)
[40]
P.T.O.
ECONOMICS
(Second Paper)
10732 / 16
10
QUESTION 4 MICRO-ECONOMICS & CONTEMPORARY ECONOMIC ISSUES
40 MARKS – 30 MINUTES
4.1
4.2
Answer the following questions.
4.1.1
Name TWO characteristics of oligopolies.
(2x1)
(2)
4.1.2
What is the effect of competition on inflation?
(1x2)
(2)
Study the graph below and answer the questions that follow.
NEGATIVE EXTERNALITIES – A CAUSE OF MARKET FAILURE
Price and
cost (R)
D
SMC1
SMC
P1
b
a
P
D
Q1
Q
Quantity
4.2.1
Which curve indicates the social cost to society?
(1)
4.2.2
Give ONE example of a negative externality.
(1)
4.2.3
Briefly describe the term market failure.
(2)
4.2.4
Explain the impact of a positive externality on social benefits.
(2)
4.2.5
Use the graph to explain why negative externalities will result in a
surplus of goods being produced in the economy.
(2x2)
(4)
P.T.O.
ECONOMICS
(Second Paper)
4.3
10732 / 16
11
Study the picture below and answer the questions that follow.
ENVIRONMENTAL SUSTAINABILITY
LOOKING AHEAD IS THE
KEY TO ECONOMIC
GROWTH. DON’T LOOK
BACK NOW.
Do you call that
economic growth?
NATIONAL
PARK
[Adapted: google search: pollution cartoons]
4.4
4.5
4.3.1
Name TWO types of pollution evident in the picture.
(2x1)
(2)
4.3.2
What message is depicted in the cartoon?
4.3.3
Briefly describe the term pollution.
(1x2)
(2)
4.3.4
How can the government intervene to ensure a cleaner
environment?
(2x2)
(4)
(4x2)
(8)
(2)
Explain inefficiency in the economy as a consequence of market failure.
What effect do administrative prices have on consumer prices in South
Africa?
(4x2)
TOTAL SECTION B:
(8)
[40]
80
P.T.O.
ECONOMICS
(Second Paper)
10732 / 16
12
SECTION C
Answer ONE of the two questions from this section in the ANSWER BOOK.
STRUCTURE OF ESSAY
Introduction
Body
 Main part: Discuss in detail / In depth discussion / Examine / Critically
discuss / Analyse / Compare / Evaluate / Distinguish / Explain /
Assess / Debate.
 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 / How? /
Suggest / Use the information and argue / Debate
Conclusion
Any relevant higher-order conclusion that should include:
 A brief summary of what has been discussed / analysed without
repeating facts already mentioned in the body
 An opinion or value-judgement on the facts discussed
 Additional support information to strengthen the discussion / analysis
 A contradictory viewpoint with motivation, if required
 Recommendations
TOTAL
MARK
ALLOCATION
Max. 2
Max. 26
Max. 10
Max. 2
40
40 MARKS – 40 MINUTES
QUESTION 5 MICROECONOMICS
“Markets are broadly categorised into perfect and imperfect markets. However, in
reality, very few examples of perfect markets exist.”

Examine in detail, the conditions of a perfect market.

Draw a clearly labelled graph which will show the profit made by the individual
producer in the perfect market over the long term.
(10 marks)
(26 marks)
[40]
QUESTION 6 CONTEMPORARY ECONOMIC ISSUES
40 MARKS – 40 MINUTES
“Tourism is on the increase worldwide.”

Discuss the effects of tourism in detail.
(26 marks)

How can domestic tourism be promoted in South Africa?
(10 marks)
TOTAL SECTION C:
TOTAL:
END
[40]
40
150