# Economics Grade 12 Paper 2 EC June 2016 Memo (English) > Grade 12 Economics Paper 2 memorandum from the EC June 2016 (English), 13 pages. Read online or get the free PDF download, question paper linked when available. - Page: https://www.hlayiso.com/library/econ-p2-memo-eng/45f01fa6-5964-4833-a0d0-18d8f119a8ad - Updated: 2026-09-27 - Subject: Economics - Grade: Grade 12 - Document type: Memorandum - Year: 2016 - Exam period: EC June - Paper: 2 - Curriculum: CAPS - Pages: 13 Breadcrumbs: [Home](https://www.hlayiso.com/) › [Library](https://www.hlayiso.com/library) › [Grade 12](https://www.hlayiso.com/library/grade-12) › [Economics](https://www.hlayiso.com/library/grade-12/economics) › [Economics Grade 12 Paper 2 EC June 2016 Memo (English)](https://www.hlayiso.com/library/econ-p2-memo-eng/45f01fa6-5964-4833-a0d0-18d8f119a8ad) ## About this document Economics · Grade 12 · EC June · 2016. Memorandum, 13 pages. Read online or download the PDF. 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Layout, diagrams and tables may not survive extraction. ### Page 1 Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 12 JUNE 2016 ECONOMICS P2 MEMORANDUM MARKS: 150 This memorandum consists of 13 pages. ### Page 2 Downloaded from hlayiso.com 2 ECONOMICS P2 (EC/JUNE 2016) SECTION A (COMPULSORY) QUESTION 1 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 C  A maize manufacturer in the Eastern Cape 1.1.2 A  competition. 1.1.3 A  monopoly 1.1.4 B  more price elastic 1.1.5 B  unskilled 1.1.6 B  price war 1.1.7 C  Physical capital cannot be reallocated easily. 1.1.8 A  encourage producers to supply important essential goods (8 x 2) (16) 1.2 MATCHING ITEMS 1.2.1 E  All factors of production are variable 1.2.2 H  Quantity demanded is exactly equal to the quantity offered at a given price 1.2.3 B  Contributes to increased competition in some markets, especially in retail trade 1.2.4 G  The marginal revenue curve runs below the demand curve 1.2.5 I  Can be easily replaced 1.2.6 A  Quantity supplied drops 1.2.7 C  One firm fixes the price and other accept it as a market price 1.2.8 F  Funded by taxes (8 x 1) (8) 1.3 CONCEPTS 1.3.1 Market  1.3.2 Price discrimination  1.3.3 Patent  1.3.4 Oligopoly  1.3.5 Total revenue  1.3.6 Black market  (6) TOTAL SECTION A: 30 SECTION B QUESTION 2 2.1 2.1.1  Net present value (NPV)   Internal rate of return (IRR)   Cost benefit ratio (CBR)  (2) 2.1.2  It serves as a frame of reference or a standard when comparing markets   It is a good point of departure for any analysis of the way prices and production are determined in practice  Accept any relevant explanation (Any 1 x 2) (2) 2.2 2.2.1  It is used to describe inefficiencies/efficiencies   Shows productive and allocative inefficiencies/efficiencies  (Any 1 x 2) (2) Copyright reserved Please turn over ### Page 3 Downloaded from hlayiso.com (EC/JUNE 2016) ECONOMICS P2 3 2.2.2 (a) Indifference curve  (1) (b) Allocative and productive inefficiency/some resources are not used  (1) (c) Production possibility curve  (1) 2.2.3  Both B and C indicate productive/technical efficiency since they are on the PPC  Although both points show productive efficiency only point C shows allocative efficiency   At point C the indifference curve is tangent to the PPC   It is only at point C that the consumers’ desires are met - the desired combination of goods is produced  (Max 5) (5) 2.3 2.3.1 Transport  (1) 2.3.2 Artificial  (1) 2.3.3 Natural monopoly  High development costs prevent others from entering the market and therefore the government supplies the product  (1 x 2) Artificial monopoly  The barriers of entry are not economic in nature, for example, patent, licensing, create monopolies  Accept any relevant differentiation (Any 1 x 2) (4) 2.3.4  Consumers are often exploited because a monopoly is the only supplier of a product   A monopoly does not produce at the minimum point of the long term average cost curve and produces few quantities but demands higher prices   Therefore consumers have to pay high prices for few goods   Some consumers are excluded from the market because they are not willing or able to pay the higher price  Accept any relevant explanation (Any 2 x 2) (4) 2.4  Non-price competition involves firms distinguishing their products from competing products on the basis of attributes other than price   Non-price competition involves promotional expenditures   Trying to improve quality and after sales servicing, such as offering extended guarantees   Spending on advertising, sponsorship and product placement   Sales promotion   Firms will engage in non-price competition, in spite of the additional costs involved,   because it is usually more profitable than selling for a lower price and avoids the risk of price wars  Copyright reserved Please turn over ### Page 4 Downloaded from hlayiso.com 4 ECONOMICS P2 (EC/JUNE 2016)  Expanding to new markets by diversifying the product range   Extending trading hours  Free deliveries and installation  (Any 4 x 2) (8) 2.5  Entry into the market is easy   The economic profit the business made in the short term attracts new businesses to enter the market   The entry of new firms leads to an increase in the supply of differentiated products   Competition causes all economic profit to disappear, which means that long-term average cost equals the price of the product   The excess profits are eliminated in the long run through imperfect emulation of successful product design, production systems, and marketing efforts by both established and new competitors   Only normal profit is made in the long run  (Any 4 x 2) (8) [40] QUESTION 3 3.1 3.1.1  There is only one seller of the product   There are barriers to entry/entry is blocked   The monopolist is regarded as a price maker   There are no close substitutes   There is no competition   Products are unique   They may enjoy favourable conditions   They decide on production levels   They are faced with demand curves   They may exploit consumers   Large amounts of starting capital are required   It is also possible for the monopolist to make an economic profit in the long run  (Any 2 x 1) (2) 3.1.2 Economic costs include explicit and implicit costs while accounting costs only take into account explicit costs only  (2) 3.2 3.2.1 Imperfect market  (1) 3.2.2 Quantity 5  (2) The reason is that TR=TC /it is where profit is zero  (Any 1 x 2)(2) (4) 3.2.3 A = 12  B = 32  C = 15  D = 6,5  E = -15  (5) Copyright reserved Please turn over ### Page 5 Downloaded from hlayiso.com (EC/JUNE 2016) ECONOMICS P2 5 3.3 3.3.1 Monopolistic market  (1) 3.3.2 large number of producers  (1) 3.3.3  Products are not identical   Clothes are similar in many ways but are not totally identical   The similarity lies in the fact that they satisfy the same consumer need   The difference is that they differ in quality and style  (Any 2 x 2) (4) 3.3.4  The equilibrium price of a monopolistic is higher than that of a perfect competitor   The monopolistic competitor does not produce at the minimum of the LAC whereas the perfect competitor does   The perfect competitor produces more at a lower price while the monopolistic competitor produces less at a higher price  (Any 2 x 2) (4) 3.4  CBA helps to make better decisions on how scarce resources are allocated to satisfy wants   Thus a project that maximizes benefits compared to costs should be chosen   Decisions by people, businesses and governments are important for the society – involves allocation of scarce resources   It also provides us with deciding alternate solutions to specific problems   The feasibility of the project is determined by subtracting costs from benefits  (Any 4 x 2) (8) 3.5 Mark allocation  Labelling on axes 1 mark  Drawing and labelling of curves 1 mark each  Indication of equilibrium (MR=MC) 1 mark  Indicating area where MR>MC 1 mark  Indicating area where MRMC: profits increase   When the marginal revenue is less than marginal cost, total profits will decline   It costs the firm more to produce an additional unit than it gets from selling the additional unit it is therefore not in the interest of the firm to produce the extra unit   MR