GERT SIBANDE DISTRICT

BADPLAAS CIRCUIT

Compiled from Previous Question Papers

Compiled by: Mr Nkosi TR

Inquiries: 0763735952

GRADE 12

ECONOMICS
CLASS ACTIVITIES FOR TERM 2

Name of Learner

School

Year

Consist of 35 Pages

ANSWER BOOK FOR TERM 2

1
ACTIVITY 1: Characteristics and Profit graphs [12 MARKS]

MICRO ECONOMICS: DATE: _______________________________________________

Answer the following questions.

2.1.1 Name any TWO characteristics of monopolistic competition. (2 x 1) (2)

2.1.2 Why would a lack of information to entrepreneurs lead to market failure? (1 x 2) (2)

2.1 Study the graph and answer the question that follow

2.2.1 Identify the quantity the firm will produce at equilibrium point. ____________________ (1)

2.2.2 Which curve represents the market price for the perfect competitor? _______________ (1)

2.2.3 Briefly describe the term normal profit. (2)

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2.2.4 What would the impact on the market be if many firms leave this industry? (2)

2.2.5 Redraw the above graph and insert the average variable cost curve (AVC) to clearly indicate the
shut-down point. (4)

TOTAL :12

3
ACTIVITY 2: Shutdown in Perfect Market and Monopolistic Competition [18]

DATE: _________________________________

2.3 Study the graph and answer the questions that follow:

2.3.1 Identify the marginal revenue curve in the graph above. _________________ (1)

2.3.2 Which curve is also known as the supply curve? ____________________ (1)

2.3.3 Why will the individual firm not produce more than 60 units? (2)

2.3.4 How does the market demand curve differ from the curve of the individual firm? (2)

2.3.5 What is the significance of point A? (2 x 2) (4)

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2.4 Differentiate between the nature of the product under monopolistic competition and under the
monopoly. (2 x 4) (8)

Monopolistic Competition Monopoly

TOTAL:18

5
ACTIVITY 3: Competition Policy: Perfect market : DATE: __________________ [08]

NEW AMENDMENTS TO COMPETITION ACT

The government introduced the Competition Act, 1998 (Act 89 of 1998) to promote competition and
enhance the efficiency of the South African economy. The Competition Commission, Competition
Tribunal and Competition Appeal Court play an important role in the administration of the Act.
Companies that are suspected of collusion are investigated and if they are found guilty, they are fined
heavily. In the new amendment of section 73A of the Competition Act, provision is made for new
criminal sanctions to be imposed on individuals.
[Adapted from Businesstech.co.za, 2016]

. 2.2.1 Which institution imposes fines on companies that are guilty of collusion? (1)

2.2.2 What is the role of the Competition Appeal Court? (1)

2.2.3 State any ONE aim of the competition policy. (2)

2.2.4 How does competition in the market benefit the consumer? (2)

2.2.5 Briefly discuss the success of the competition policy of South Africa. (2 x 2) (4)

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 TOTAL: 10

ACTIVITY 4: Short term and long term equilibrium in the perfect market [16]

DATE: __________________________________________

4.1 Draw and explain the Economic Profit and Normal profit of a perfect market in the short run

Economic Profit Graph Normal Profit Graph

EXPLAINATION EXPLAINATION

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 TOTAL: 16

ESSAY QUESTIONS TO BE ANSWERD IN CLASSWORK BOOKS OR ESSAY BOOKS

Activities to choose from on essay questions and Asses learners

ACTIVITY 5: Characteristics of perfect Market

 Discuss the characteristics of perfect market in details (26)

 Discuss with the support of graphs how a price is determined in this market (10)

ACTIVITY 6 : Monopoly Market Structure

 Discuss the short run graphs of a monopoly (26)

 Evaluate the characteristics of an Oligopoly Market Structure (10)

Activity 7: Perfect Market and Monopoly

 Compare the perfect market with Monopoly market structure

 Discuss with the support of graph the economic profit of a monopoly in a long run

Activity 8: Oligopoly

 Discuss the characteristics of Oligopoly in details (26)

 Explain how the imperfect markets can increase their market share using non price
competition (10)

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ACTIVITY 9: Compare the Monopoly, Oligopoly and Monopolistic Competition [33]

DATE: __________________________________________

Monopoly Oligopoly Monopolistic

CHARACTERISTICS competition
Number of
Businesses

Nature of products

Control over price

Market Entry

Profit

Examples

2 marks for discussion and 1 mark for example in each structure= 33

9
ACTIVITY 10 : Long Run equilibrium of the perfect market [12]

DATE: ________________________________________________________

2.1. Answer the following questions. 4

2.1.1 Name TWO Characteristics of Oligopoly. (2 x 1) (2)

2.1.2 How can the perfect market maximize profit without increasing the price as they are price takers?
(1 x 2) (2)

10
2.2 Study the graph and answer the questions that follow

2.2.1 Where does the marginal cost curve (MC) intersect the average cost curve (AC)? (1)

2.2.2 Identify the price where the individual producer will make an economic profit. (1)

2.2.3 Briefly describe the term marginal cost. (2)

2.2.4 Why is the MR in the perfect market the same as the demand curve? (2)

2.2.5 Explain how long-run equilibrium is achieved in the market. (2 x 2) (4)

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 TOTAL: 14

ACTIVITY 11: Perfect Market and Imperfect Market [ 10]

DATE: ______________________________________________

Match column A and B

COLUMN A Answers COLUMN B

1. Normal Profit
A. Consist of a single seller of the product with no close
substitutes
2. Collusion
B. A situation where one firm determine the price and the
rest follow.
3. Cartel
C. Minimum earning the prevents the owner from leaving the
business
4. Branding D. AVC= MC
5. Firm E. Illegal agreement between oligopoly firms to limit
competition
6. Monopoly F. The total income of all units sold or produced
7. Economic G. A group of oligopoly organisation that group together to
Profit operate like a monopoly

8. Price H. Is the characteristic of monopolistic competition that

leadership promote the differentiation of products.
9. Shutdown I. A small individual/ industry producing few units
point
10. Average J. TR is greater than TC
Revenue
K. TC greater than TR

TOTAL:10

12
ACTIVITY 12 : One Word under perfect market and imperfect market [10]

DATE: __________________________________________________

1.3.1 Costs that remain the same even If more or less units are produced.

1.3.1

1.3.2 Actual expenditure of a business on the purchase or hire of inputs required for the production
process

1.3.2

1.3.3 A market structure where the individual firms are price-takers

1.3.3

1.3.4 The additional revenue earned when sales increase by one more unit

1.3.4

1.3.5 A situation where total revenue is equal to total cost ________________________________

1.3.6 The difference between Total revenue and Total costs ______________________________

1.3.7 The period of time where at least one of the factors of production remains fixed

1.3.7

1.3.8 The profit that a business makes that is more than the normal profit

1.3.9 Unit cost is also known as … cost. ___________________________________________

1.3.10 The nature of the product traded in a pure oligopoly is _____________________________

TOTAL: 10

13
ACITIVITY 13 : Perfect and imperfect market graphs [16]

Draw the following graphs without discussion:

DATE: ________________________________________________________

3.1 Profit maximization for perfect market using S3.2 hutdown of a perfect market (4)
TR and TC (4)

3.3 Kinked demand curve (4) 3.4 Monopolistic graph (4)

TOTAL: 16

14
ACTIVITY 14 DATE:_____________________________________ MONOPOLY GRAPH

2.1.1 Name TWO redress methods used by the government to improve income distribution that u
leaned in grade 11 (2)

2.1.2 Explain how price leadership can result in consumers paying higher prices in an oligopoly
market. (1 x 2) (2)

2.2 Study the graph and answer the questions that follow

2.2. Define the concept long run as used in economics. (2)

2.2.2 Identify the Profit maximization point in the graph . ______________________________(2)

2.2.3 Explain why the marginal revenue (MR) curve will always lie below the demand curve (DD) in
this type of market. (2)

2.2.4 Calculate the profit or loss of this monopolist. Show ALL calculations. (4)

TOTAL:14

15
ACTIVITY : 15 Monopoly Graphs [10]

2.2 Study the graph and answer the questions that follow

2.2.1 Identify any factor that can influence the prices of goods and services for the monopoly. (1)

2.2.2 At what price must the monopolist sell to obtain maximum revenue? ______________ (1)

2.2.3 What is the nature of the product of a typical monopolist? (2)

________________________________________________________________________________
2.2.4 Which curves are required to determine how much profit the monopolist will make? (2)

2.2.5 Why will you discourage the monopolist from increasing the price of the product drastically? (2x
2) (4)

TOTAL: 10
16
ACTIVITY:16 Oligopoly :DATE: _____________________________ [10]

2.2 Study the picture and answer the questions

2.2.1 Identify the products produced by the businesses above. (1)

.2.2 Which market structure is depicted above? ______________________________________(1)

2.2.3 Why will a new business find it difficult to enter into this type of market? (2)

2.2.4 What does interdependency of businesses in this market structure imply? (2)

2.2.5 Explain, without the use of a graph, why businesses in this industry will be reluctant to decrease
the price of their product. (2 x 2) (4)

TOTAL: 10

17
ACTIVITY:17 Imperfect markets, Mergers, collusion an d competition policy [20]

2.1.1 Name two characteristics of monopolistic competition. (2)

2.1.2 How can the imperfect markets increase their market share (2)

2.4 Discuss the success of the competition policy in South Africa (8)

2.5 Evaluate the impact of Collusion and Mergers in the economy (8)

Collusion Mergers

TOTAL: 20

18
ACTIVITY: 18 OLIGOPOLY GRAPH [10]

DATE:_______________________________________________________________

2.2 Study the graph and answer the questions that follow

2.2.1 Which imperfect market structure is illustrated above? ______________________________ (1)

2.2.2 Name the downward sloping demand curve above._________________________________ (1)

2.2.3 Explain how price leadership works in this type of market. (4)

2.2.4. Assume that the current selling price is R90. Explain why this business will not lower prices to
improve its sales. (4)

TOTAL: 10

19
ACTIVITY: 19 Graph for monopoly in the short Run [08]

2.3 Study the graph below answers the questions that follow:

2.3.1 What is the selling price of the business above? ___________________ (1)

2.3.2 Identify the letter in the graph above that represents the loss minimising point._________ (1)

2.3.3 Briefly describe the term monopoly. (2)

2.3.4 Why is the equilibrium position above typical of the short run? (2) 2.3.5 Determine the loss for
this business. Show ALL calculations. (4)

TOTAL:08

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21
MARKET FAILURE

ACTIVITY 1 : Negative externalities [18]

4.3 study the graph below and answer the following questions

4.3.1 Define the concept ‘Negative Externalities’ (2)

4.3.2 Give ONE example of a negative externality. ____________________________________ (1)

4.3.3 Which curve indicates the social cost to society? __________________________________(1)

4.3.4 Explain how negative externalities can lead to market failure by using the data given in the
above graph. (6)

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4.4 Explain inefficiency in the economy as a consequence of market failure. (4 x 2) (8)

TOTAL: 18

23
ACTIVITY: 2 Perfect market and negative externalities [14]

2.1 Answer the following questions.

2.1.1 Give any TWO examples of fixed cost. (2 x 1) (2)

2.1.2 Why are businesses under the perfect market structure price takers? (1 x 2) (2)

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2.2.1 Give an example of a negative externality. (1)

2.2.2 Name the shaded area (A) in the graph above._____________________________ (1)
2.2.3 Briefly describe the term social cost. (2)

2.2.4 Explain a lack of information to entrepreneurs as a cause of market failure. (2)

2.2.5 Why is the socially optimal output more beneficial to society? (2 x 2) (4)

TOTAL: 14

25
ACTIVITY: 3 : Maximum price and market failure [16]

Answer the following questions.

4.1.1 State any TWO benefits for the government of levying taxes on business that cause more
pollution (2 x 1) (2)

4.1.2 What impact do maximum prices have on the market? (1 x 2) (2)

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2.2 Study the graph and answer the questions that follow

4.2.1 Identify the number of houses the market will provide if all resources were spent on houses. (1)

_____________________________________________________________________

4.2.2 How many schools should the government provide to reach the social optimum allocation? (1)

___________________________________________________________________

_ 4.2.3 Briefly describe the term market failure. (2)

4.2.4 Why are markets reluctant to produce public goods such as roads? (2)

27
4.2.5 How can the government ensure macroeconomic stability through their involvement in
production? (2 x 2) (6)

TOTAL: 16

28
ACTIVITY :4 Positive externalities [08]

DATE: ____________________________________________________

2.4 Use the graph below to explain the effect of positive externalities in the market.

TOTAL:08
29
ACTIVITY : 5 Cost Benefit Analysis [10]

2.3 Study the activity below and answer the questions that follow

COST BENEFIT ANALYSIS (CBA)

We live in a world of scarce resources, so we need to set priorities and make choices about how to
allocate resources. The CBA provides us with a tool that could be used in this decision-making
process. Calculations in a CBA should be done by using market prices.
[Source: www.google.com]

2.3.1 In which sector is the cost benefit analysis generally used? (1)

2.3.2 Give any ONE redress method used by government to enforce the redistribution of income. (1)

2.3.3 Briefly describe the term cost-benefit analysis. (2)

2.3.4 Why is it necessary to do a cost benefit analysis for large projects? (2)

2.3.5 Why are some projects undertaken although the financial cost is very high? (2 x 2) (4)

TOTAL: 10

30
ACTIVITY :6 Cost Benefit Analysis [22]

2.3 Study the abstract below and answer the questions that follow

2.3.1 In the information above, who is more likely to use a CBA when making decisions? (1)

2.3.2 Identify ONE project in the data above that the government is considering for this community(1)

2.3.3 Give a reason why a CBA will NOT be of use to the mechanic in the cartoon. (2)

2.3.4 According to the data above, which project would be best for the community? (2)

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2.3.5 Why do you think it is important to do a CBA when deciding about large projects? (2 x 2) (4)

2.4 Explain the nature of the product and market entry as characteristics of perfect competition. (8)

Nature of product Market Entry

2.5 Discuss the importance of cost benefit analysis (4)

TOTAL: 22

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ESSAYS

ACTIVITY : 7 Subsidies, Minimum price and Minimum Wages [40 MARKS – 40 MINUTES]

QUESTION 5: MICROECONOMICS

 Discuss, with the aid of graphs, the consequences of market failure under the following
headings:

− Producer subsidies (8 marks)

− Maximum prices (8 marks)

− Minimum wages (10 marks) (26 marks)

Additional Part

Graph for negative externalities

 With reference to the graph below, analyse how a negative externality can result in the
misallocation of resources. (10)
TOTAL: 40

33
ACTIVITY: 8 Causes of market failure : ESSAY [40]

 Discuss in details the causes of market (26)

 Draw a and explain the graph for production possibility curve under the topic of market failure
(10)

TOTAL: 40

34
ACTIVITY : 9 Minimum price, minimum wage and maximum price with inefficiencies [14]

2.1.1 How does minimum price benefit the firm (2)

2.1.2 How does maximum price benefit the consumer (2)

2.2 List any two types of inefficiencies (2)

2.3 Evaluate the use of minimum wage policy in South Africa (8)

TOTAL:14

THE END

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