# Economics Grade 12 Paper 2 NSC November 2014 Memo (English) > Grade 12 Economics Paper 2 memorandum from the NSC November Exam 2014 (English), 20 pages. Read online or download the free PDF. - Page: https://www.hlayiso.com/library/economics-p2-nov-2014-memo-eng/13340072-f382-433a-81ec-2591a89d95ca - Updated: 2026-09-27 - Subject: Economics - Grade: Grade 12 - Document type: Memorandum - Year: 2014 - Exam period: NSC November Exam - Paper: 2 - Curriculum: CAPS - Pages: 20 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 NSC November 2014 Memo (English)](https://www.hlayiso.com/library/economics-p2-nov-2014-memo-eng/13340072-f382-433a-81ec-2591a89d95ca) ## About this document Economics · Grade 12 · NSC November Exam · 2014. Memorandum, 20 pages. Read online or download the PDF. Read it free online on the page above; download the PDF from there. ## Document text Text extracted from the PDF. Layout, diagrams and tables may not survive extraction. ### Page 1 Downloaded from hlayiso.com 1 GRAAD 12 NATIONAL SENIOR CERTIFICATE GRADE 12 ECONOMICS P2 NOVEMBER 2014 MEMORANDUM MARKS: 150 This memorandum consists of 20 pages. Copyright reserved Please turn over ### Page 2 Downloaded from hlayiso.com Economics/P2 2 DBE/November 2014 NSC – Memorandum SECTION A (COMPULSORY) QUESTION 1 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 A only variable  1.1.2 B homogeneous  1.1.3 C there are no close substitutes  1.1.4 A maximum  1.1.5 A Johannesburg Summit  1.1.6 B outbound  1.1.7 B conservation  1.1.8 C South African Tourism  (8 x 2) (16) 1.2 MATCHING ITEMS 1.2.1 I actual expenditure of a business, for example wages and interest  1.2.2 C where MC = AVC  1.2.3 D when a group of producers form a collective monopoly  1.2.4 F market price = marginal revenue 1.2.5 A leads to a growth in tourism 1.2.6 B aircraft noise  1.2.7 G people travelling within their own countries  1.2.8 E controlled by government-appointed authorities  (8 x 1) (8) 1.3 GIVE ONE WORD 1.3.1 Normal profit  1.3.2 Marginal cost  1.3.3 Pareto efficiency / Pareto optimal / Pareto  1.3.4 Inflation  1.3.5 Indigenous Knowledge Systems / IKS  1.3.6 Hyperinflation  (6 x 1) (6) TOTAL SECTION A: 30 Copyright reserved Please turn over ### Page 3 Downloaded from hlayiso.com Economics/P2 3 DBE/November 2014 NSC – Memorandum SECTION B Answer TWO of the three questions from this section in the ANSWER BOOK. QUESTION 2: MICROECONOMICS 2.1 Answer the following questions. 2.1.1 State TWO characteristics of monopolistic competition. • A large number of producers (sellers) are active in the market  • The nature of the product is differentiated  • Entry and exit into the market is free (relatively easy)  • Businesses have little control over the price of the product  • Information for both buyers and sellers is incomplete  • Non price competition and branding play an important role in monopolistic competition  (2 x 1) (2) Accept any other correct characteristic. 2.1.2 What will happen if one firm in the perfect market decides to increase its selling price? This firm will not be able to sell any units due to high levels of competition / the market price will remain unchanged / the firm will go out of business  Accept any other relevant response. (1 x 2) (2) 2.2 Data Response 2.2.1 Explain the term toll. Tolling is an billing system used on certain highways / roads or parking bays / fee / tax  (2) 2.2.2 What method can the government use to ensure that the introduction of toll roads is the best decision? Cost Benefit Analysis / CBA / market research / survey / SWOT analysis / impact studies / environmental studies / positive and negative aspects / needs broad public participation (public was not consulted) Accept any other relevant method  (2) 2.2.3 How can toll roads lead to market failure? • Companies can pass the additional cost onto consumers / higher production cost  • It could lead to a reduction in output / supply  • Mass action against e-tolling can disturb the free flow of goods and people - disturbing the economy  Accept any other relevant argument (2) Copyright reserved Please turn over ### Page 4 Downloaded from hlayiso.com Economics/P2 4 DBE/November 2014 NSC – Memorandum 2.2.4 Argue in favour of the implementation of toll roads. • Source of income for the province (government)  • Money needed to maintain roads and infrastructure  • Job creation  Accept any other positive response with regard to the consumer, business, government and foreign investors (2 x 2) (4) 2.3 Study the graph and answer the questions that follow. 2.3.1 Indicate the profit maximisation point of the monopolist. MR=MC / c  (1) 2.3.2 How many units will be produced at the maximisation point? 100  (1) 2.3.3 Determine whether the business is making an economic profit or an economic loss. Show all calculations. Total Revenue: 6 x 100 = 600  OR 6 – 4  = 2 x 100  Total Cost: 4 x 100 = 400  = 200  Profit = Total Revenue – Total Cost = 600 - 400 = 200  The business is making economic profit  Accept a graphical motivation (max 2). (4) 2.3.4 What favourable conditions may the monopolist enjoy in comparison to other market structures? • The monopoly is the only supplier of that particular product  • At liberty to set own prices / charges higher prices  • Decide on production levels / restrict its output  • Laws protection  • Protected by barriers of entry  • Favourable geographical area  • Does not produce at the lowest possible cost  • The monopoly is least efficient at allocating resources and perfect competition is the most efficient at allocating resources  Accept any other relevant answer (Any 2 x 2) (4) Copyright reserved Please turn over ### Page 5 Downloaded from hlayiso.com Economics/P2 5 DBE/November 2014 NSC – Memorandum 2.4 Explain how the immobility of factors of production can cause market failure. • Markets may not be able to respond to consumer demand immediately if factors of production cannot respond and move around easily  • Resources tend not to be very mobile and do not adjust easily to consumer demand  • Labour may take time to move into new occupations and geographical areas  e.g. family ties, friends, convenience, schools  • Unskilled labour are not able, willing or do not always have the time or money to gain the skills they need – this causes unemployment or employment at low salaries  • Physical capital, cannot easily be moved to places where they are needed  e.g. factory buildings and other infrastructure  • It takes time for industries to adapt to new technological changes / structural changes  e.g. computer-assisted production  Accept any relevant examples. (Any 4 x 2) (8) 2.5 Explain how SASOL can compete in an oligopolistic market with other petrol-selling companies in South Africa. They will engage in non-price competition  by focusing on some of the following: • Advertising and marketing  e.g. television and radio  • Additional services  e.g. convenience stores  • Branding  SASOL logo  e.g. fuel for cleaner engine  • Friendly staff  e.g. offer additional services such as tyre pressure check  • Clean sanitary facilities  cleaned regularly / additional services e.g. a baby room  • Competitions  e.g. win a car  • Loyalty rewards for customers  e.g. fill-up to a certain amount, getting a free engine wash  • Collaborate with businesses  e.g. fast-selling food outlets  • Advertise  with and in conjunction with other businesses  • Account holders  certain companies filling, only pay month-end  Accept any other relevant answer. (Any 4 x 2) (8) [40] Copyright reserved Please turn over ### Page 6 Downloaded from hlayiso.com Economics/P2 6 DBE/November 2014 NSC – Memorandum QUESTION 3: CONTEMPORARY ECONOMIC ISSUES 3.1.1 Give TWO examples of World Heritage Sites in South Africa. • Mapungubwe  • The Vredefort Dome  • The Sterkfontein Caves / Cradle of Humankind  • Robben Island  • Richtersveld Cultural and Botanical landscapes  • ISimangaliso Wetland Park / Greater St Lucia Wetland Park  • The Cape Fynbos region/ Table Mountain / Agulhas National Park  • Ukhahlamba Drakensberg Park  (Any 2 x 1) (2) 3.1.2 How can tourism influence the lives of poor people near tourist destinations? • Get employed  • Sell goods and services to the tourists  Any other positive or negative arguments e.g. drug trafficking and prostitution, increased crime rates, pollution, led to increased prices for locals. (Any 1 x 2) (2) Any other relevant answer. 3.2 3.2.1 What are resources that can be replaced called? Renewable resources  (2) 3.2.2 What do you think is the aim of celebrating ‘earth hour’? To make people aware of the role played by the production of electricity and fuel to environmental damage / saving energy / make people aware of the destruction of oil, coal and gas  Accept any other relevant opinion. (2) 3.2.3 How can people reduce transport fuel consumption in order to sustain the environment? • Using means of transport that carry a large number of passengers such as trains and buses  • Using lift clubs/ travelling in groups  • Walking  • Using bicycles  • Using energy efficient vehicles e.g. hybrid cars  Accept any other relevant answer (Any 1 x 2) (2) Copyright reserved Please turn over ### Page 7 Downloaded from hlayiso.com Economics/P2 7 DBE/November 2014 NSC – Memorandum 3.2.4 In your opinion, why are non-renewable resources referred to as 'dirty'? • When burnt, they produce greenhouse gases  • Non-renewable resources cause pollution  • This will cause damage to the ozone layer / environment  • Which will lead to global warming  • Which will cause climate change  (Any 2 x 2) Accept any other relevant response (4) 3.3 3.3.1 What are unadjusted CPI figures called? Headline inflation  (2) 3.3.2 Why is the weighting of items in the basket of goods important? To indicate the relative share / importance of the total consumer spending on the various items / it is clear that food and beverages, housing and utilities and transport’s relative importance in total spending exceed that of the other  (2) 3.3.3 Why would you exclude food from the CPI basket when calculating core inflation? Core inflation excludes items that have prices that are highly volatile (substantive increase and decrease in prices) / affected by government intervention (2) 3.3.4 Comment on the impact that the overall CPI index has on the consumer. • Generally CPI increased / Overall CPI index increased from 5.5 in June to 6.3 in July  • Consumers paid more in July than they did in June for the same items/the cost of living increased / June’s figure is within the inflation target range, but July lies outside the target range affecting the cost of living in a negative way  • Measures inflation and economic growth  Accept any other relevant impact. (4) Copyright reserved Please turn over ### Page 8 Downloaded from hlayiso.com Economics/P2 8 DBE/November 2014 NSC – Memorandum 3.4 Discuss the economic benefits of tourism for the government and infrastructure development. Government • To raise revenue: Tourism makes a direct and indirect contribution to the government revenue through taxes  e.g. airport departure taxes, air tickets, VAT, excise duty  • Advertise the economy: delivers excellent service to tourists and create a good image of the country  • Create jobs and relieve poverty: especially in the informal sector  e.g. musicians  • It earns foreign exchange for the country thereby increasing its foreign reserves  e.g. casino's, accommodation and transport form a very profitable source of foreign reserves  • To recover external cost: It helps the government to recover from tourists a portion that serves as a compensation for providing the infrastructure  • With excellent service, tourism can create a good image for the country  e.g. public amenities such as showers and toilets on beaches  • Achieve socio-economic objectives: e.g. black economic empowerment and SMME development  (Max 4) Infrastructure development • All infrastructure built to support tourism become assets to the country e.g. information services  • Residents and tourists enjoy adequate and well maintained physical and basic infrastructure / social infrastructure  such as ambulances, medical clinics, information  • Security services and police services that are provided for use by tourists are important for use by residents  • Economic infrastructure is prioritised by government to support tourism growth  e.g. ports, beaches, rivers and lakes  • Most economic corridors have tourism as an important focus  • PPP’s are sometimes used for the development of infrastructure  Accept any other relevant answers (Max 4) (8) 3.5 Why are industries often accused of contributing to land and water pollution? • Production process often causes pollution when people introduce foreign matter into the environment.  • Firms often release chemical and physical materials on land and in water. • Water pollution kills the organisms that live in water. • Land pollution reduces the fertility of soil.  • Extraction of natural resources through mining often results in the damage to land.  • Deforestation often takes place when firms cut trees in preparation for construction of industrial sites. Accept any other relevant answers. (4 x 2) (8) [40] Copyright reserved Please turn over ### Page 9 Downloaded from hlayiso.com Economics/P2 9 DBE/November 2014 NSC – Memorandum QUESTION 4: MICROECONOMICS AND CONTEMORARY ECONOMIC ISSUES 4.1 4.1.1 Give TWO examples of the preservation of the environment. • Ecological system  • Heritage site  • Indigenous forest  • Wetland  • River mouth system  • Taxation / subsidies / private ownership / reserves / land expropriation / e.g. West Coast nature reserve Any other relevant fact. (Any 2 x 1) (2) 4.1.2 How can the consumer benefit from competition? • Will pay lower prices  • Equal opportunities  • Better quality services  • Higher standard of living  Any other relevant fact. (Any 1 x 2) (2) 4.2 4.2.1 Identify the type of tourism illustrated in the photograph above Cultural tourism  (1) 4.2.2 What is meant when South Africans are encouraged to explore their own country? South Africans are encouraged to travel/be tourist in their own (1) country  e.g. Sho’t-left campaign  4.2.3 How would you ensure that SA becomes a world Top 20 travel destination by 2020? • International tourism should increase even more than the 10,2% in 2012  • Tourism as an industry should contribute more to the GDP  • Focusing even more on domestic tourism  • Encouraging South Africans to explore their own country  • Reduce crime / marketing / natural exhibitions / infrastructure / build on a tourist and friendly environment / upmarket technology Any other relevant fact. (Any 2 x 2) (4) Copyright reserved Please turn over ### Page 10 Downloaded from hlayiso.com Economics/P2 10 DBE/November 2014 NSC – Memorandum 4.2.4 Why is tourism viewed as a major job creator? Give examples from your own community to support your answer. • Tourism is labour intensive  implying that a large number of jobs are created with every unit of capital invested e.g. local population using beads and wood to create jewellery  • Tourism employs many skills  from hairdressers next to the road  / tour guides offering various tours to tourists  • Provide immediate employment to local people  e.g. live entertainment at Gold Reef City or Table Mountain  • Provide entrepreneurial opportunities to many individuals with a small capital outlay  Any other relevant fact. (Any 2 x 2) (4) 4.3 4.3.1 Which imperfect market structure is illustrated above? Oligopoly  (1) 4.3.2 Name the above downward sloping demand curve above. Kinked demand curve  (1) 4.3.3 Explain how price leadership works in this type of market. • The dominant firm will initiate a change in price, e.g. increase. They will realise economic profits (abnormal profits)  • Other competitors will also increase their prices  OR • Dominant firm will decrease prices, luring customers away from other firms in the market  • Other competitors will decrease price not to lose their market share  (Any 2 x 2) (4) 4.3.4 Assume that the current selling price is R90. Explain why this business will not lower prices to improve its sales. • Below price of R90, the firm sees the demand curve as being relative price inelastic, the firm thinks that if it reduces the price of its product, other firms will follow its lead.  • As a result all the other firms will sell a bit more output, but the firms will no longer be producing their profit maximisation output.  • If the firm lowers its prices to R50 the total income will be R9 500 (50 X 190) compared to the original income of R13 500 (90 x 150)  The firm suffers a loss of R4 000  (2 x 2) (4) Copyright reserved Please turn over ### Page 11 Downloaded from hlayiso.com Economics/P2 11 DBE/November 2014 NSC – Memorandum 4.4 Explain environmental taxes and marketable permits as intervention strategies to achieve environmental sustainability. Levying environmental taxes • Environmental taxes are taxes that are imposed on output of goods that generates external environmental costs (pollution)  • These taxes are called green taxes / eco taxes  • Carbon dioxide from wineries and vehicle tyres are taxed.  • The tax rate is equal to the external marginal costs.  (2 x 2) (4) Marketable permits • Government gives each business a licence to pollute to a certain extent.  • Businesses can sell their licences to other businesses that has a larger or increased pollution level.  • In South Africa marketable permits are granted by the Department of Minerals and Energy.  (2 x 2) (4) (8) Copyright reserved Please turn over ### Page 12 Downloaded from hlayiso.com Economics/P2 12 DBE/November 2014 NSC – Memorandum 4.5 What are the effects of the implementation of minimum wages in South Africa? • The market fails to pay fair increases in salaries of people who are not in a strong enough bargaining position with their employers  • As a result, they are unable to secure real wage increases and their wages remain low and therefore unfair income takes place  • A minimum wage will increase the wage rate, however less workers will be demanded (over supply) in the labour market  • This will lead to an increase in unemployment  • Examples of workers that minimum wages are applied: farm workers, domestic workers  (Any 4 x 2) GRAPH: D1 S  Mark allocation for graph: W1 • Labelling of wage rate  and labour employed  • Equilibrium wage  W Wage rate • Demand and supply curves  each • Increase in wage rate  • Effect on the quantity demanded  • Effect on the quantity supplied   (Max. 4) S D1  0 Q1 Q Q2 Quantity of labour employed  DISCUSSION: • Minimum wages improve the distribution of income from W to W1  • However quantity of labour demanded will decrease from Q to Q1  • The quantity supply of labour will increase from Q to Q2  • Therefore, an oversupply of labour (increase in unemployment) will occur with the new minimum wage at W1 Accept any other relevant argument. (Max. 8) (8) [40] TOTAL SECTION B: 80 Copyright reserved Please turn over ### Page 13 Downloaded from hlayiso.com Economics/P2 13 DBE/November 2014 NSC – Memorandum SECTION C Answer any ONE of the two questions in 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/ Max. 26 Critically discuss/Analyse/Compare/Evaluate/Distinguish/ Explain/Assess/Debate Additional part: Give own opinion/Critically discuss/Evaluate/ Max. 10 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 Conclusion Max. 2 TOTAL 40 QUESTION 5: MICROECONOMICS 40 MARKS – 35 MINUTES Under perfect market conditions the market price of products is determined through the interaction of supply and demand. • Discuss perfect competition under the following headings: → A comparison of the demand curve of the individual producer and industry → Profit maximisation Make use of graphs to support your discussion. (26) • In your opinion, does the Competition Act of South Africa promote fair competition? (10) [40] Copyright reserved Please turn over ### Page 14 Downloaded from hlayiso.com Economics/P2 14 DBE/November 2014 NSC – Memorandum INTRODUCTION An industry consists of all the firms that produce the same product where the output of an industry is the sum of the output of its individual firms.  Accept any other relevant answer (Max. 2) BODY: MAIN PART Demand curve for the market  Demand curve of a perfect Competitor  Price  Price  S D  e  d d P1 P1 D S 0 Q1 Quantity 0 Quantity Mark allocation Mark allocation • Labelling of axes 1 mark • Labelling of axes 1 mark • Labelling on axes 1 mark • Labelling on axes 1 mark • Draw and labelling of demand curve 1 mark • Indication of origin 1 mark • Draw and labelling of supply curve 1 mark • Draw and labelling of demand curve 1 mark • Indication of equilibrium 1 mark • Heading 1 mark • Heading 1 mark Max: 4 marks Max: 4 marks • In a perfectly competitive market the price of a product is determined by the interaction between market demand and market supply for the product.  • The market demand curve is represented by DD which is downward sloping and the supply curve (SS) is upward sloping.  • As a result of the interaction between market demand and market supply, the equilibrium is established at P1.  • Extending this price the graph of the individual produce. The demand curve for the firm is horizontal that indicates that the individual producer is a price taker.  Copyright reserved Please turn over ### Page 15 Downloaded from hlayiso.com Economics/P2 15 DBE/November 2014 NSC – Memorandum 2. Profit maximisation Marginal cost/marginal revenue approach Price MC MR=MC Profits decrease MRMC 0 Q1 Q Q2 Quantity Mark allocation • Correct heading 1 mark • 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 / MR