Economics Grade 12 Paper 2 NSC Mock 2025 Memo

DEPARTMENT OF EDUCATION DEPARTEMENT VAN ONDERWYS LEFAPHA LA THUTO ISEBE LEZEMFUNDO [ PROVINCIAL PREPARATORY EXAMINATION | [ GRADE 12 | ECONOMICS PAPER 2 SEPTEMBER 2025 | MARKING GUIDELINES MARKS: 150 These marking guidelines consist of 20 pages. | Copyright reserved Please turn over a NT

Economics P2/Grade 12 2 NC/September 2025 Marking Guidelines SECTION A (COMPULSORY) QUESTION 1 1.1 MULTIPLE-CHOICE QUESTIONS tw EEE SOR Baan baa MPNOMRWNHo OWDPrOOQWO>Y Competition Commission Vv“ U shapevY two dominant sellers” Y” imperfect informationy “ hyperinflation’ “ Tourism policiesY ¥ United Nations Climate Change Conference (1997) ¥” green taxv ¥ (8x2) 1.2 MATCHING ITEMS 1.241 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 Tat 1.2.8 E H the level of production where a firm's revenue covers only its variable costs” when firms in an industry implicitly agree to avoid competitive behaviors like price wars without explicit communication” the additional cost incurred by producing one more unit of a good or service” the unintended costs or benefits of an economic activity that affect third parties not directly involved in the activity” a framework where central banks use policy tools to keep the general rise in prices steady, helping ensure economic stability and confidence” involves constructing and improving essential systems like transportation, utilities, and communication networks“ the total impact of someone's actions on warming the planet” trap heat in the air and siow its escape, warming the planet” (8 x 1) 13 GIVE THE TERM aaa a a OnnRowra Copyright reserved Explicit costs¥ Price discrimination” Public goods/Community goods” Deflation’ Tourist/ Outbound tourist” Renewable “ (6x1) TOTAL SECTION A: Please tum over (16) 8; @) 30

Economics P2/Grade 12 3 NC/September 2025 SECTION B Marking Guidelines Answer any TWO of the three questions in this section in the ANSWER BOOK. QUESTION 2: MICROECONOMICS 40 MARKS — 30 MINUTES 2.1 SHORT QUESTIONS 2.1.1 Give any TWO examples of demerit goods. « Cigarettes Vv e Alcohol” e Illegal DrugsY¥ * GamblingY (Accept any other correct relevant response) (2x1) Why is the demand curve relatively inelastic for firms in the monopoly market? In a monopoly market, the demand curve is relatively inelastic because there are few or no substitutes, the product is unique, consumer loyalty is high, the goods or services are often essential, and high barriers to entry prevent competition.” “ (Accept any other correct relevant response) (1x 2) 2.2 DATA RESPONSE 2.2.1 2.2.2 2238 2.2.4 Copyright reserved Identify the dominant firm in the information above. KFCY Name any other competitor that is NOT included in the information above. McDonalds” Burger King” Nando'sY¥ Steers” Debonairs PizzaY Wimpy” (Accept any other correct relevant response) Briefly describe the term hybrid structure. A hybrid structure in a market context combines elements from both perfect competition and monopoly, allowing the organization to benefit from the best of both worlds.” ” {Accept any other correct relevant response) Why do firms in a monopolistic market have incomplete market information? Firms in a monopolistic market have incomplete information due to market complexity, unpredictable customer preferences, potential competition, rapid technological changes, and regulatory uncertainties.vv (Accept any other correct relevant response) Please tum over (2) (2) (1) (1) (2) (2)

Economics P2/Grade 12 4 NC/September 2025 2.25 Marking Guidelines What strategies can Chicken Licken implement to improve their market share? « Expanding menu options to cater to local tastes and preferences, including healthier and vegetarian choices.v ” « Enhancing their digital presence with online ordering and social media engagement.v * Implementing customer loyalty programs to encourage repeat business.“ ~ * Engaging with the community through events and sponsorships.v ” « Improving customer experience with exceptional service.v “ Forming strategic partnerships with other brands or influencers.” “ « Developing creative marketing campaigns that resonate with the target audience.““ « Adopting sustainability practices to attract environmentally conscious consumers.v ¥ (Accept any other correct relevant response) (2 x 2) 2.3 DATA RESPONSE 23.1 2.3.2 2.3.3 2.3.4 Copyright reserved Identify the initial quantity produced as depicted in the graph above. Qv Name any ONE type of tax that governments implement to help with the redistribution of wealth. Progressive Income Tax” Weatth tax~ Capital gains tax” Property tax¥ Corporate faxv” Luxury tax” Gift tax” Inheritance tax” Briefly describe the term producer subsidies. Producer subsidies are financial supports from the government that help lower the cost of making goods. This not only helps businesses stay competitive and keep prices stable, but also encourages them to produce more.“ “ (Accept any other correct relevant response) Explain why black markets arise when government implement maximum prices. Black markets arise when the government sets a maximum price below the market equilibrium, leading to higher demand and reduced supply incentives, resulting in a shortage./Consumers willing to pay more than the controlled price turn to black markets, where products are sold at higher prices to meet excess demand.v ¥ {Accept any other correct relevant response) Please turn over (4) (1). (1) (2).

Economics P2/Grade 12 5 NC/September 2025 Marking Guidelines 2.3.5 How is media important for promoting positive externalities? ¢ Media is crucial for promoting positive externalities as it helps spread information, raise awareness, and influence public behaviour. VY ¢ Itcan educate the public about the benefits of positive externalities like education, healthcare, and environmental sustainability. Vv“ * Through advocacy campaigns and news stories, media can support policies and initiatives that promote these benefits.““ ¢ Additionally, media can shape public behavior by highlighting Positive actions and showcasing role models, encouraging others to follow suit.“ ” « By holding governments and organizations accountable, media ensures transparency and effective implementation of beneficial Policies. Vv (Accept any other correct relevant response) (2x2) 2.4 Briefly discuss immobility of factors of production as a reason for market failure. Workers find it difficult fo relocate to areas with better job opportunities due to barriers such as housing costs, family commitments, or lack of information.“ Results in uneven distribution of labour, with some regions experiencing labour shortages and others facing high unemployment rates.” ” Acquiring new skills or education takes time, preventing workers from transitioning into different industries or job roles quickly.” Y Leads to unfilled job vacancies and lower productivity in industries requiring specialized skills.” ” Specialised machinery and equipment cannot be easily transferred from one industry to another.” “ Industries facing declining demand cannot quickly repurpose their capital, leading to inefficiencies and underutilization.”V Shifting from producing one type of product to another or adopting new production methods requires changes in workers’ skills, employment, and work patterns.” ” These transitions take time, causing disruptions in production, reduced output, and temporary unempioyment.v Land is inherently immobile and its use is often restricted by zoning laws and regulations.“ Prevents land from being allocated to its most productive use, leading to inefficiencies. ““ Immobile factors of production cannot be reallocated to areas where they are most needed.v~“ Results in an inefficient allocation of resources, with some sectors experiencing excess supply while others suffer from shortages, leading to lower overall productivity and economic growth.” ¥ immobility of factors of production can lead to prices not adjusting quickly to changes in supply and demand.v” Causes prolonged periods of disequilibrium in the market, where resources are not being used optimally.“ ” Copyright reserved Please tum over (2 (4)

Economics P2/Grade 12 6 NC/September 2025 ° Marking Guidelines Entrepreneurship can cause problems in the market when it can't move easily. If people with good business ideas don’t have support or can’t start new businesses in areas that need them, their skills go to waste.v” That means fewer jobs, less innovation, and resources not being used well.v“v (Accept any other correct relevant response) (Allocate a maximum of 4 marks for mere listing of facts) (4x 2) 25: How does price fixing in an oligopolistic market affect the economy? Price fixing eliminates competition among firms, leading to a lack of incentives for innovation and efficiency. Vv Firms may become complacent, resulting in lower quality products and services.v Consumers end up paying higher prices for goods and services because firms are not competing to offer lower prices.v This can reduce consumer surplus and overall economic welfare. To maintain higher prices, firms may restrict the output of goods and services. This can lead to shortages and decreased availability of products in the market.“ ~ Price fixing distorts the allocation of resources, as prices no longer reflect the true supply and demand conditions.” “” Resources may be misallocated, leading to inefficiencies in the economy.“ ” Price fixing can create barriers to entry for new firms, as established firms can use their agreed-upon prices to maintain market dominance.¥ “ This reduces market dynamism and prevents new entrants from introducing innovative products or services.“ “” Price fixing is illegal in many countries, including South Africa, as it violates antitrust laws. v~ Firms caught engaging in price fixing can face significant fines and legal penalties, which can disrupt their operations and impact the broader economy.v¥ “” (Accept any other correct relevant response) (Allocate a maximum of 2 marks for mere listing of facts) (4x 2) Copyright reserved Please turn over (8) (8) [40]

Economics P2/Grade 12 1G NC/September 2025 Marking Guidelines QUESTION 3: CONTEMPORARY ECONOMIC ISSUES 40 MARKS — 30 MINUTES 3.4 Answer the following questions. 3.1.1 Name any TWO methods to measure inflation. e Indexes (CPI/PPI)~ e Weighting “ e Gross Domestic Product (GDP) Deflator” ¢ = Inflation ratew (Accept any other correct relevant response) (2x1) Why are tourists attracted to areas where people practice indigenous knowledge? Tourists are attracted to indigenous knowledge systems for their cultural richness, authentic experiences, and the educational opportunities they provide about sustainable living and natural resource management./These systems offer unique perspectives and the chance to support and appreciate indigenous communities.“ ” (Accept any other correct relevant response) (1x 2) 3.2 DATA RESPONSE 3.2.1 3.2.2 3.2.3 3.2.4 Copyright reserved Identify the trend of the average inflation rate from the information above. A gradual decline/ declining/ decrease over the years.” (Accept any other correct relevant response) Name any ONE beverage item that is included in consumer inflation basket. ° Coffeev ° Teav * Soft drinks (soda)” e Fruit juices” e Bottled water” e Alcoholic beverages (beer, wine, spirits)“ © Milk” (Accept any other correct relevant response) Briefly describe the term administered prices. Administered prices are prices set by the government or a regulatory authority, rather than being determined by market forces of supply and demand.v~ (Accept any other correct relevant response) What potential impact can a decrease in the inflation rate have on consumers? e The value of money increase, consumers can buy more goods and services. Vv“ {Accept any other correct relevant response) Please turn over 2) 2) (1) (1) (2) (2)

Economics P2/Grade 12 3.2.5 8 NC/September 2025 Marking Guidelines Why do rising housing costs contribute heavily to the overall inflation? e Housing cosis represent a significant portion of the consumer inflation basket, so any increase in housing expenses has a substantial impact on overall inflation.v ¥ ¢ Since housing is a fundamental necessity, a large portion of the population is affected by rising housing costs, leading to broader inflationary pressures.v ¥ e Increased housing costs lead to higher prices for related goods and services, such as utilities and maintenance, which further contribute to overall inflation.v” e Higher housing costs reduce households’ disposable income, leading to increased prices for essential goods and services as consumers prioritize their spending.“ “ e Rising housing costs can lead to higher wage demands as workers seek to cover their increased living expenses, resulting in higher production costs for businesses and further inflation.“ “” (Accept any other correct relevant response) (2x 2) 3.3 DATA RESPONSE 3.3.1 3.3.2 3.3.3 3.3.4 Copyright reserved identify the type of tourism depicted in the cartoon above. Ecotourism.” Name any other animal, besides the elephant, that is part of South Africa’s Big Five. e Lion’ Leopard” Rhinow Buffalo” eve Briefly describe the term transit tourist. A transit tourist is a traveler who makes a short stopover in a place while on their way to another destination.” “” (Accept any other correct relevant response) How is marketing used to distribute tourist effectively to many sites? e Targeted advertising and social media campaigns to attract different segments of travelers.“ ¥ e Content marketing and collaborations with influencers, airlines, and travel agencies increase visibility and interest in diverse destinations.v ¥ ¢ Additionally, promoting events and festivals, along with strong public relations, ensures a balanced and sustainable tourism experience.v¥ (Accept any other correct relevant response) Please tum over (4) (1) (1) (2) (2)

Economics P2/Grade 12 9 NC/September 2025 3.4 Copyright reserved Marking Guidelines 3.3.5 How do tourist arrivals help in alleviating poverty? e Tourism creates numerous jobs in sectors like hospitality, transportation, and tour guiding, providing stable income for individuals and their families.” ” * Tourist spending stimulates the local economy, benefiting businesses and leading to community development and improved living standards.v ¥ « The need to cater to tourists leads to improved infrastructure, enhancing the quality of life and access to essential services for residents.“ e Tourism encourages the preservation of cultural heritage and traditions, providing income for local artisans and fostering educational opportunities. “v~ « Tourism promotes the growth of small and micro-enterprises, circulating money within the local economy and supporting family and community businesses.” ~ e Sustainable tourism practices emphasize natural resource conservation, creating jobs in environmental management and boosting eco-tourism.“ ” (Accept any other correct relevant response) (2x 2) Briefly discuss the effects of tourism to businesses and government. Effects of Tourism on Businesses Businesses in the hospitality, transportation, retail, and entertainment sectors see increased sales from tourist spending.v“ Tourism supports a wide range of jobs, from entry-level positions to skilled roles, across various industries.“ ~“ Tourism opens up new markets for local products and services, encouraging innovation and diversification.~ “ Success in tourism can attract further investment in the region, improving business opportunities and infrastructure.“ Businesses gain exposure to diverse cultures, fostering creativity and adaptability in products and services.v ” Many tourism businesses earn most of their income during peak seasons, leading to unstable cash flow and job insecurity during off-seasons.v Relying too much on tourists makes businesses vulnerable to global events like pandemics, economic downturns, or travel restrictions.” “ Increased demand from tourists can drive up prices for rent, goods, and services, making it harder for local businesses and residents to afford them.vv Overcrowding and overuse of resources can damage the environment, which in turn affects businesses that rely on natural attractions.v“ Businesses may shift their offerings to cater to tourists rather than locals, which can weaken community identity and long-term customer loyalty.v Effects of Tourism on Government ° Governments collect revenue through taxes on tourism-related activities, such as accommodation, transportation, and attractions. v“ Tourism stimulates economic growth, leading to infrastructure development and improved public services.” “” Please tum over (4)

Economics P2/Grade 12 10 NC/September 2025 Marking Guidelines * Government initiatives in tourism create job opportunities, reducing unemployment rates.” ” ¢ Tourism encourages the government to invest in preserving cultural heritage sites and promoting national identity.“v e Governments often implement sustainable tourism practices and conservation efforts to protect natural resources.“ ” « High infrastructure costs to support tourism can strain public budgets.“ “ « Environmental degradation may require costly clean-up or regulation.“ “ e Uneven development can widen regional inequalities. ~~ ¢ Political pressure to prioritize tourists over local needs may cause social tension.“ Y” (Accept any other correct relevant response) (Allocate a maximum of 4 marks for mere listing of facts) (2x4) (8) 3.5: Evaluate the impact of high inflationary expectation on investors. Positive Impact e Real assets like property, gold, and commodities often rise in value, providing a hedge against inflation. Vv“ ¢ Inflation-indexed securities offer returns that keep pace with rising prices, protecting purchasing power.v” e Some companies, especially in energy or consumer staples, can pass on higher costs and maintain profits. “~~ e The real value of debt owed decreases, benefiting investors with fixed borrowing costs.¥ ” Negative Impact e Returns on fixed-income investments lose value in real terms as inflation rises.v¥ « Fear of aggressive interest rate hikes and economic uncertainty can disrupt markets.“ Firms unable to pass on rising input costs may see profit margins shrink.” “ Inflation can obscure true asset performance, making it hard to judge real gains or losses.v ¥ (Accept any other correct relevant response) (Allocate a maximum of 2 marks for mere listing of facts) {4x 2) te ) [40] Copyright reserved Please turn over

Economics P2/Grade 12 11 NC/September 2025 Marking Guidelines QUESTION 4: MICROECONOMICS & CONTEMPORARY ECONOMIC ISSUES 40 MARKS — 30 MINUTES 44 Answer the following questions. 4.1.1 Name any TWO types of inefficiencies. ¢ Allocative Inefficiency e Productive Inefficiency/Technical inefficiency” (2x1) (2) 41.2 Explain the relationship between increase in productivity and cost push inflation? Increased productivity can reduce cost-push inflation by lowering production costs and increasing output, which balances supply and demand./It also stabilizes wage costs, supports economic growth, and improves competitiveness, helping to maintain stable prices even when production costs rise.” (Accept any other correct relevant response) (1x2) (2) 4.2 DATA RESPONSE 4.21 identify the new repo rate set by the South African Reserve Bank from the extract. 7,50%Y (1) 4.2.2 Name the current inflation target range set by the South African Reserve Bank. 3 -6%Y (1) 4.2.3 Briefly describe the term cash reserve requirements. i Cash reserve requirements are the minimum amount of money that banks must keep on hand, either in their vaults or deposited with the central bank.v {Accept any other correct relevant response) (2) 4.2.4 How will government spending projects be affected if there is an increase in demand pull inflation? « Higher inflation erodes the real value of government spending, requiring more funds to maintain the same level of public services and projects. ~~ * Higher inflation can lead to higher interest rates, increasing the government's cost of borrowing and interest payments on existing debt.v“v * The government may need to reprioritize its budget to manage inflationary pressures, possibly diverting funds from other areas.vv¥ ¢ To mitigate the impact of inflation on low-income households, the government may increase social spending on subsidies, welfare programs, and direct transfers.” (Accept any other correct relevant response) (2) Copyright reserved Please turn over

Economics P2/Grade 12 12 NC/September 2025 4.25 Marking Guidelines Why could a lower repo rate potentially stimulate economic recovery in South Africa? e Lower repo rates decrease borrowing costs for businesses and consumers, encouraging spending and investment.“ ¥ ¢ Lower interest rates reduce loan and mortgage repayments, leaving consumers with more disposable income to spend.” “ ° Affordable loans allow businesses to expand, hire, and invest, leading to job creation and increased production.“ “ * Lower interest rates attract domestic and foreign investors, contributing to economic growth.v “ ¢ A supportive monetary policy environment boosts confidence among consumers and businesses, leading to increased spending and investment.” “ (Accept any other correct relevant response) (2x 2) 4.3 DATA RESPONSE 4.3.1 4.3.2 4.3.3 43.4 4.3.5 Copyright reserved Identify the category with the highest value from the table above. Social benefits” Name which component in private costs is most likely to require ongoing costs over the lifetime of a project? Maintenance” Briefly describe the term cost benefit analysis. Cost-benefit analysis is a method used to evaluate the feasibility of a government project by comparing the total expected costs with the total expected benefits. “” (Accept any other correct relevant response) How can improved infrastructure lead to economic growth? ¢ Improved infrastructure reduces costs and boosts productivity for businesses.” e High-quality infrastructure attracts both domestic and foreign investment, creating jobs and business opportunities.v “ ¢ Better infrastructure improves the movement of goods, services, and people, stimulating trade and economic integration.v “ ¢ Infrastructure improvements enhance residents' quality of life, leading to a more productive workforce and increased consumer spending.v “ (Accept any other correct relevant response) Calculate the overall Cost-Benefit Ratio (CBR) considering both private and social categories. (Show all calculations.) « CBR = Total Benefits/Total Costs” « CBR = R3,000,000”/R1,250,000” e CBR=2,4Vvv {Accept any other correct relevant response) Please tum over 4 (2) (2) (4)

Economics P2/Grade 12 13 NC/September 2025 Marking Guidelines 4.4 Briefly discuss natural and artificial monopolies. Natural Monopolies « High development costs prevent others from entering the market and therefore the government supplies the product e.g. electricity in South Africa is provided by the government enterprise Eskom.v * Natural monopolies arise in industries with high fixed costs and significant economies of scale, where a single firm can produce the entire market output at a lower average cost than multiple competing firms.“ “ * Since natural monopolies can lead to market power and potential price gouging, governments often regulate these industries to ensure fair pricing and access.v¥ Regulatory bodies may set price caps and service quality standards. Industries such as electricity, water, and natural gas.“ “ The infrastructure required (e.g., power plants, water treatment facilities, pipelines) involves substantial capital investment, making it inefficient for multiple providers to duplicate these networks. Vv“ ¢ Certain transportation systems, like railways and subways, where the high cost of tracks and stations necessitates a single operator for efficiency.v “ Artificial Monopolies * The barriers to entry are not economic in nature they are created through external interventions such as government regulations, patents, or legal barriers that restrict competition. “Y” e These protections can grant exclusive rights to a single firm, preventing other firms from entering the market.” “ ¢ Patents and intellectual property rights grant firms exclusive control over specific innovations, products, or processes for a defined period.”“ ¢ This exclusivity can prevent competitors from offering similar products and allow the patent-holding firm to dominate the market.” “ ¢ Governments may grant exciusive licenses or create regulatory barriers to entry, which can result in artificial monopolies.v” “” ¢ This often occurs in industries where the government wants to control the market for strategic or public interest reasons.“ ” ¢ Companies that hold patents on specific drugs have exclusive rights to manufacture and sell those drugs, preventing competitors from entering the market until the patent expires. Vv“ * Governments may grant exclusive licenses to certain firms to operate in specific regions, creating monopolies in those areas.v V (Accept any other correct relevant response) (Allocate a maximum of 4 marks for mere listing of facts) (2x4) 4.5 Evaluate the environmental impact of tourism. Positive Impacts of Tourism on the Environment: e Tourism can promote the conservation and preservation of natural habitats and biodiversity.v “ ¢ National parks and wildlife reserves are often funded and maintained through tourism revenue. This helps protect endangered species and ecosystems. ¥ ¥ ¢ Tourism can raise awareness about environmental issues among tourists and local communities.v” Copyright reserved Please turn over (8)

Economics P2/Grade 12 14 NC/September 2025 Marking Guidelines Educational programs and eco-tourism initiatives can lead to more sustainable behaviors and practices.“ ” Revenue generated from tourism can be reinvested into environmental protection and conservation projects.“ ” This includes initiatives like reforestation, habitat restoration, and pollution control.“ Tourism can create economic incentives for local communities to engage in sustainable practices.“ ” For example, eco-friendly accommodations and tours can attract environmentally conscious travelers, driving demand for sustainable products and services. v ” Negative impacts of Tourism on the Environment: High tourist activity can strain focal resources, such as water and energy. This can lead to shortages and increased pressure on the environment.v Tourism can generate significant waste, including plastic waste, sewage, and air pollution from transportation.“ ~ This can harm wildlife and ecosystems, and contribute to climate change. The development of tourism infrastructure, such as hotels, resorts, and roads, can lead to habitat destruction and fragmentation.v“ This can threaten the survival of wildlife and disrupt natural ecosystems. Popular tourist destinations can become overcrowded, leading to soil erosion, vegetation damage, and disturbance to wildlife.“ This can degrade the quality of the environment and diminish the visitor experience.v~ Tourism-related transportation, such as flights and cruises, contributes to greenhouse gas emissions.v ¥ ; This exacerbates climate change and its associated impacts on the environment.“ ~ (Accept any other correct relevant response) (Allocate a maximum of 2 marks for mere listing of facts) (4x2) Copyright reserved TOTAL SECTION B: Please turn over (8) [40] 80

Economics P2/Grade 12 15 NC/September 2025 Marking Guidelines SECTION C Answer any one of the two questions in this section in the ANSWER BOOK. QUESTION 5: MICROECONOMICS 40 MARKS — 40 MINUTES ¢ Discuss in detail the short-run equilibrium positions in a perfect market with the aid of three separate graphs.(economic profit, economic loss and normal profit) (25) « Why does the agricultural market often fail to meet the criteria/conditions of a perfectly competitive market? (10) [49] INTRODUCTION A perfect competition is a market structure with a large number of buyers and sellersv ¥ (Accept any other relevant introduction) (Max. 2) BODY MAIN PART ECONOMIC LOSS Price/Cost/Revenue Leviste) ¢) SESS ee d ARV P,/40 MR 0 q:f/10 Quantity Mark allocation Correct drawing and labelling of cost curves: 1 mark Correct drawing and labelling of revenue curves: 1 mark Correct indication of loss minimizing point: 4 mark Correct indication of area (economic loss): 4 mark Max 4 marks e The minimum point of the short-term average cost curve (AC) is higher than the market price. “¥ Economic loss occurs when total revenue (TR) is less than total cost (TC). Vv” Economic loss is a negative difference between TR and TC. vv When there is economic loss some businesses will leave the market. Vv“ At the market price of P1/40 loss is minimized at point e where MR = MC, v¥ Q/10 units of the product will be produce at an average cost of c/50. Vv TR = Oq1 x OP1 (40 x 10) and total cost is equal to Oc1 x Oq1 (50 x 10). vw eoeeeee Copyright reserved Please turn over

Economics P2/Grade 12 16 NC/September 2025 Marking Guidelines » The economic loss is represented by area P1cbe (100).v“ (Accept any other correct relevant response) (6) (Max 10) ECONOMIC PROFIT a 4 MC ~ 2 AC z & 3 oO @ P80 gd AR Y = ' MR c/40 ° qi/10 Quantity Mark allocation Correct drawing and labelling of cost curves: 1 markCorrect drawing and labelling of revenue curves: 1 markCorrect indication of profit maximisation point: 1 markCorrect indication of area (economic profit): 1 mark Max 4 marks « The minimum point of the short-term average cost curve (AC) is lower than the market price. vv” « Economic profit occurs when total revenue (TR) is greater that total costs (TC)/when average revenue (AR) is greater than average cost (AC). vv Economic profit is the positive difference between TR and TC. VY When there is economic profit some businesses will enter the market. Vv“ At the value price of P1/50 profit in maximize at point e where MR = MC. Vv Q1/10 units of the product will be produced at an average cost of c/40. Vv Total revenue is equal to 0q1 x OP1 (50 x 10) and the total costs is equal to 0q1 = Oc (40 x 10).vv e The economic profit is represented by the area P1ebc (R100). ¥v oeoeee (Accept any other correct relevant response) (6) (Max 10) NORMAL PROFIT Es MC v/AC 2 S = a s 3 oo MRV P./50 AR Mark allocation ‘Correct drawing and labelling of cost curves: 1 mark Correct drawing and labelling of revenue curves: 1 mark Correct indication of profit maximisation point e / normal profit: 2 marks: Max 4 marks Oo qo ‘Quantity e Normal profit is the minimum earning required to prevent the entrepreneur leaving the market. Vv « Normal profit occurs when total revenue (TR) is equal to total costs (TC)/when average revenue (AR) is equal to average cost (AC). Vv” Copyright reserved Please turn over

Economics P2/Grade 12 17 NC/September 2025 Marking Guidelines ¢ Normal profit is referred to zero economic profit (breakeven) because TR — TC = O/AR ~ AC = 0. vv At the market price P1/50 profit is maximized at point e where MR = MC. Vv“ Q1/10 units of product will be produced at an average cost off R50. Vv When businesses are making normal profit there will be no incentives for a new business to enter or existing businesses to leave the market. VY The lowest point of AC is tangent to AR/MR curves. Vv“ This implies that AC is equal to AR and the toal costs is equal to total revenue (0P1eq1/500).“~ (Accept any other correct relevant response) (6) Max (10) (Allocate a maximum of 8 marks for mere listing of headings and examples) (Max 26) ADDITIONAL PART While agricultural produce is often cited as an example of a perfect market, this assumption is not entirely accurate. Here are several reasons why: ¢ Farmers and buyers may not have perfect knowledge of market conditions, prices, and product quality.v” This information asymmetry can lead to inefficiencies in the market.” “ « New farmers may face significant barriers to entering the market, such as high startup costs, limited access to credit, and regulatory hurdies.v“ ¢ Agricultural products are not always homogeneous. Different farmers may produce crops with varying qualities, tastes, or certifications (e.g. organic), which can affect their market value.v “ e Agricultural markets are often subject to government subsidies, tariffs, and regulations, which can distort market prices and create inefficiencies.” V e Agricultural products may incur significant transportation and storage costs, which can affect their market price and availability.” “ ¢ Agricultural markets are vulnerable to weather-related events, such as droughts, floods, and heatwaves, which can impact crop yields and quality.“ e Some agricultural markets may be dominated by a few large producers or buyers, which can lead to market power and inefficiencies.v ¥ « Small-scale farmers may face challenges in accessing markets, due to factors such as lack of infrastructure, limited market information, and high transaction costs.”” e Agricultural products may be subject to varying quality control standards and certifications, which can affect their market value and acceptance.” ” e Agricultural production can generate externalities, such as environmental degradation, water pollution, and soil erosion, which can impact the market and society as a whole.“ “ (Allocate a maximum of 2 marks for mere listing of facts) (Accept any other correct relevant response) (Max 10) CONCLUSION In conclusion, while agricultural produce may exhibit some characteristics of a perfect market, such as a large number of buyers and sellers, it is not entirely accurate to assume that these markets are perfectly competitive VW (Accept any other correct relevant response) (Max 2) Copyright reserved Please tum over [40]

Economics P2/Grade 12 18 NC/September 2025 Marking Guidelines QUESTION 6: CONTEMPORARY ECONOMIC ISSUES 40 MARKS — 40 MINUTES ¢ Discuss the FIVE major environmental problems and the international measures taken to solve these problems to ensure a sustainable environment. * What role can education play in promoting environmental sustainability? INTRODUCTION Environmental sustainability is the ability of the environment to survive its use for economic activitiesY “ (Accept any other correct relevant introduction.) (Max 2) MAIN PART Biodiversity loss V ¢ Biodiversity is the variety of species of plants and animal in a particular area.v “ * It is concerned with the genetic variety among individuals within the same species and the number of species within a community of organisms. v “ e The diversity of species in the world decreases rapidly due to extinction and extinction is an irreversible process.vv Modern techniques such as gene transplant can help to limit the loss of species.” The United Nations’ Convention on International Trade in Endangered Species (CITES) prohibits trade in endangered plant and animal species. v “ ¢ Monitoring and regulation of trade in endangered species is carried out using permits and quotas.v¥” e In South Africa, a permit is needed for one to import plants and animals.v “” Chemical wastes “ « Chemical waste are toxic and their effect on an organism can be death or infertility.” “ « Chemical waste needs to be carefully managed to ensure that it does not leak into the ground water.v “ e The Stockholm Protocol bans the twelve of the deadliest manufactured chemicals. v ~ e The Rotterdam Convention protects countries that lack adequate infrastructure to monitor the import and export of dangerous chemicals.” “” Hazardous waste “ « Hazardous waste is more than a chemical waste and it includes toxic metal waste such as lead.v¥ e Hazardous waste has a slow decomposition rate (It stays poisonous for a long time) “~¥ e Hazardous waste can endanger all life forms and entire ecosystem.v “” The Basel Convention on the control of Trans Boundary Movement of Hazardous waste allows trade between countries that have signed the convention.“ “ e Hazardous waste is dumped illegally because it is convenient and cheap.v¥“ Climate change “ e Climate change is the change in the composition of the atmosphere that is related to human activity. ¥¥ Copyright reserved Please tum over (25) (10) [49]

Economics P2/Grade 12 19 NC/September 2025 Marking Guidetines * A build-up of certain gases such as carbon dioxide in the atmosphere causes the heat to be captured in to the atmosphere, which leads to global warming. v ~ Effects of climate change include change in temperature and weather patterns.” V The United Nations' Framework Convention on Climate Change (UNFCCCC) sets objective to reduce greenhouse gases.v ¥ * Kyoto Protocol was signed as an agreement in which greenhouse gases emission tevel for developed countries were agreed upon.v¥ e The objectives of the agreement were not achieved.” ” Loss of indigenous Knowledge “ + Indigenous people have knowledge about the natural environment, which they often use to make a living. “~Y” * Indigenous people use organic methods and natural processes in dealing with the environment.¥ ¥ ¢ Local capacity building is important as it can help indigenous people to learn more of the environment beyond their traditional life style and experiences.” V e UNESCO’s management of social transformation programme (MOST) is a global effort to document local/indigenous knowledge before it is lost forever. v “ (Accept any other correct relevant introduction.) (At least TWO marks should be allocated for the international measure used solve each problem) (Accept other major environmental issues) (Allocate a maximum of 8 marks for mere listing of headings and examples) (Max 26) ADDITIONAL PART e Education can teach people about the impact of human activities on the environment, helping them become more aware of sustainability issues.” “ ¢ Through lessons on ecology, climate science, and sustainable development, education can provide a deeper understanding of environmental challenges and solutions.”~7¥” e By equipping learners with relevant knowledge, education can enable individuals to make decisions that support long-term sustainability.” ¢ Programs like recycling, energy-saving campaigns, and workshops can influence communities to adopt eco-friendly habits. “” ¢ Schools and local groups can lead environmental activities such as tree planting and clean-up efforts, fostering a shared sense of responsibility “VY” e Education can cultivate environmentally conscious citizens who advocate for policies that protect natural resources.v¥¥ ¢ By promoting scientific exploration, education can encourage breakthroughs in renewable energy, sustainable agriculture, and green technology.” “ e Education can highlight career opportunities in the sustainability sector, encouraging growth in fields like environmental management and conservation.“ e Linking environmental quality to human health, education can motivate practices that improve both ecological and public well-being.v” ¢ Education can nurture international collaboration through shared research and participation in global sustainability efforts. “” e Byreaching young minds early, education can shape future leaders and communities who prioritize sustainability throughout their lives. “~~ e Education can prepare people for careers in renewable energy, sustainable farming, and environmental management — boosting the green economy.v¥ Copyright reserved Please tum over

Economics P2/Grade 12 20 NC/September 2025 Marking Guidelines ¢ It can drive research into eco-friendly technologies like solar power, electric vehicles, and sustainable packaging.v¥Y” ¢ Educated individuals and businesses are more likely to use resources wisely, reducing waste and saving costs.”7” ¢ Education can teach entrepreneurs and companies how to operate in ways that protect the environment while remaining profitable “~~ (Allocate a maximum of 2 marks for mere listing of facts) (Accept any other correct relevant response) (Max 10) CONCLUSION: Education is pivotal in promoting environmental sustainability by raising awareness, encouraging positive behaviors, and supporting policies and innovations, education lays the foundation for long-term environmental protection and sustainability. YY” [4)] ' (Accept any other correct relevant response) (Max 2) TOTAL SECTIONC: 40 GRAND TOTAL: 150 Copyright reserved