# Economics Grade 12 P2 NSC November Mock 2026 Memo (English) > Grade 12 Economics Paper 2 memorandum from the NSC November Mock Exam 2026 (English), 20 pages. Read online or download the free PDF. - Page: https://www.hlayiso.com/library/grade-12-economics-2026-nsc-november-mock-exam-memorandum-paper-2/e6f14c41-bbad-4109-a7d8-b2cbe58a9ddc - Updated: 2026-10-29 - Subject: Economics - Grade: Grade 12 - Language: English - Document type: Memorandum - Year: 2026 - Exam period: NSC November Mock Exam - Paper: 2 - Publisher: Hlayiso - 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 P2 NSC November Mock 2026 Memo (English)](https://www.hlayiso.com/library/grade-12-economics-2026-nsc-november-mock-exam-memorandum-paper-2/e6f14c41-bbad-4109-a7d8-b2cbe58a9ddc) ## About this document Economics · Grade 12 · NSC November Mock Exam · 2026 · English. 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 hlayiso mock exams Practice Series: Grade 12 NSC Preparation WWW.HLAYISO.COM NATIONAL SENIOR CERTIFICATE GRADE 12 ECONOMICS P2 MOCK EXAMINATION 2026 MARKING GUIDELINES MARKS: 150 These marking guidelines consist of 20 pages. Copyright reserved Please turn over ### Page 2 Economics/P2 2 Hlayiso/Mock 2026 NSC – Marking Guidelines PRINCIPLES FOR MARKING ECONOMICS (HLAYISO MOCK 2026) • Mark ALL responses in the candidate’s script, whether correct or incorrect. • Where a candidate gives more responses than required: in Section A mark the FIRST response only; in 2.1.1, 3.1.1 and 4.1.1 mark the first TWO responses only; in Sections B and C (choice questions) mark only the required number of questions and write EXTRA on any additional question. • Use ONE tick (✓) for each mark awarded, placed at the fact being credited. Use a neat cross for incorrect responses. • One-word answers are acceptable for: list, name, state, identify. FULL sentences are required for: describe, explain, evaluate, analyse, suggest, differentiate, distinguish, define, discuss, why, how. The words provide, what, tabulate, identify and give are read in context. • Calculations: 3 marks for the method/workings and 1 mark for the correct final answer. Award full marks for a correct answer only if the method is shown or clearly implied. • Graphs are marked according to the allocation of marks given in these guidelines. • Accept responses that are correct and relevant but expressed differently. Spelling errors are not penalised if the meaning is clear. • In multiple-choice questions, accept the correct answer written in words instead of the letter. • Record the sub-total of each sub-question in the right margin and transfer question totals to the cover of the answer book. Copyright reserved Please turn over ### Page 3 Economics/P2 3 Hlayiso/Mock 2026 NSC – Marking Guidelines SECTION A (COMPULSORY) QUESTION 1 30 MARKS – 20 MINUTES 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 B – monopolistic competition ✓✓ 1.1.2 D – lowest ✓✓ 1.1.3 C – public ✓✓ 1.1.4 A – average revenue is equal to average cost ✓✓ 1.1.5 A – core ✓✓ 1.1.6 C – inbound ✓✓ 1.1.7 D – Montreal Protocol ✓✓ 1.1.8 B – market-based ✓✓ (8 x 2) (16) 1.2 MATCHING ITEMS 1.2.1 D – actual payments made by a business to outside suppliers of inputs ✓ 1.2.2 A – shows that oligopolists are reluctant to change their prices ✓ 1.2.3 F – the additional income received from selling one more unit of output ✓ 1.2.4 H – the difference between what consumers are willing to pay and what they actually pay for a product ✓ 1.2.5 G – an extremely high and accelerating rate of increase in the general price level ✓ 1.2.6 I – knowledge unique to a community that is passed on from one generation to the next ✓ 1.2.7 C – the variety of plant and animal species in a particular habitat ✓ 1.2.8 B – development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs ✓ (8 x 1) (8) 1.3 GIVE THE TERM 1.3.1 Duopoly ✓ 1.3.2 Shutdown point ✓ 1.3.3 External costs / Negative externalities ✓ 1.3.4 Stagflation ✓ 1.3.5 Tourism receipts / Tourism (tourist) spending ✓ 1.3.6 Non-renewable resources ✓ (6 x 1) (6) [30] TOTAL SECTION A: 30 Copyright reserved Please turn over ### Page 4 Economics/P2 4 Hlayiso/Mock 2026 NSC – Marking Guidelines SECTION B QUESTION 2: MICROECONOMICS 40 MARKS – 30 MINUTES 2.1.1 Give any TWO examples of fixed costs. • Rent ✓ • Insurance premiums ✓ • Salaries of permanent staff ✓ • Interest on loans ✓ • Licence fees ✓ • Depreciation of buildings and equipment ✓ • Property rates ✓ (Accept any other correct relevant response) (2 x 1) (2) 2.1.2 Why is the demand curve of an oligopolist kinked? Competitors will match a price decrease but will not follow a price increase ✓✓, so demand is relatively elastic above the current price and relatively inelastic below it. ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 2.2.1 Identify the profit-maximising level of output in the graph above. 30 units ✓ (1) 2.2.2 Name the type of monopoly that exists because of legal barriers such as patents and licences. Artificial monopoly ✓ (1) 2.2.3 Briefly describe the term marginal cost. The additional cost incurred when one more unit of output is produced ✓✓ (Accept any other correct relevant response) (2) 2.2.4 Explain why the MR curve of a monopolist lies below its demand curve. To sell an additional unit the monopolist must lower the price of all units sold ✓✓, so the additional revenue from each extra unit is less than the price (AR). ✓✓ (Accept any other correct relevant response) (2) 2.2.5 Calculate the economic profit made by the monopolist. Economic profit = TR – TC = (P x Q) – (AC x Q) = (R70 x 30) – (R50 x 30) ✓ ✓ = R2 100 – R1 500 ✓ = R600 ✓ OR (AR – AC) x Q = (R70 – R50) x 30 = R20 x 30 = R600 (4) Copyright reserved Please turn over ### Page 5 Economics/P2 5 Hlayiso/Mock 2026 NSC – Marking Guidelines 2.3.1 Identify the institution that adjudicates competition cases. Competition Tribunal ✓ (1) 2.3.2 Name the type of collusion where firms follow a dominant firm’s price without a formal agreement. Tacit collusion / Price leadership ✓ (1) 2.3.3 Briefly describe the term cartel. A formal agreement between firms in the same industry to fix prices, limit output or share markets in order to restrict competition ✓✓ (Accept any other correct relevant response) (2) 2.3.4 Explain how bid-rigging of municipal tenders affects taxpayers. • Municipalities pay inflated prices for infrastructure, so more tax revenue is needed for the same projects ✓✓ • Fewer projects can be completed with the available budget, so taxpayers receive poorer service delivery ✓✓ (Accept any other correct relevant response) (2) 2.3.5 How can the enforcement of competition policy benefit consumers? • Consumers pay lower prices when businesses are forced to compete instead of fixing prices ✓✓ • Competition encourages businesses to improve the quality of their products ✓✓ • Consumers have a wider choice of products when new businesses can enter the market ✓✓ • Businesses are encouraged to be innovative, which leads to new and better products ✓✓ • Penalties discourage businesses from abusing their market power to exploit consumers ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over ### Page 6 Economics/P2 6 Hlayiso/Mock 2026 NSC – Marking Guidelines 2.4 With the aid of a correctly labelled graph, explain the effect of a negative externality on the market. Price MSC welfare loss S = MPC e1 P P1 e D = MPB = MSB 0 Q Q1 Quantity Allocation of marks: correct labelling of axes = 1; correct drawing and labelling of MPC and MSC = 1; correct drawing and labelling of demand (MPB = MSB) = 1; correct indication of equilibrium points (e, e1 ) and/or welfare loss = 1 (Max. 4) Explanation: • A negative externality occurs when production imposes costs on third parties that are not paid by the producer (e.g. pollution) ✓✓ • Producers consider only their private costs (MPC), so the market is in equilibrium at e, where MPC = MPB, producing Q1 at price P1 ✓✓ • If external costs are included, the marginal social cost (MSC) lies above MPC and the socially optimal output is Q at price P (e1 ) ✓✓ • The market therefore over-produces the good by Q1 Q and charges a price that is too low ✓✓ • The shaded area represents the welfare (deadweight) loss to society ✓✓ • Resources are over-allocated to this product, so allocative efficiency is not achieved ✓✓ (Accept any other correct relevant response) (Max. 4) (8) Copyright reserved Please turn over ### Page 7 Economics/P2 7 Hlayiso/Mock 2026 NSC – Marking Guidelines 2.5 Why do businesses in an oligopoly prefer non-price competition to price competition? • Oligopolists are interdependent: a price reduction by one firm is quickly matched by rivals, so no firm gains market share ✓✓ • Price cuts may lead to price wars in which all firms lose revenue and profits ✓✓ • Demand below the kink is relatively inelastic, so lowering prices reduces total revenue ✓✓ • Non-price competition, such as advertising, branding and loyalty programmes, builds customer loyalty that rivals cannot easily copy ✓✓ • Product differentiation (quality, after-sales service, packaging) allows firms to charge higher prices without losing many customers ✓✓ • Non-price competition can increase market share without reducing profit margins ✓✓ • Price competition may attract the attention of the Competition Commission if it is seen as predatory pricing ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (4 x 2) (8) [40] Copyright reserved Please turn over ### Page 8 Economics/P2 8 Hlayiso/Mock 2026 NSC – Marking Guidelines QUESTION 3: CONTEMPORARY ECONOMIC ISSUES 40 MARKS – 30 MINUTES 3.1.1 Name any TWO causes of cost-push inflation. • Increases in wages above productivity ✓ • Rising prices of imported inputs, e.g. crude oil ✓ • Depreciation of the rand (exchange rate) ✓ • Increases in administered prices, e.g. electricity tariffs ✓ • Natural disasters, e.g. droughts and floods ✓ • Higher profit margins (profit-push) ✓ • Decline in productivity ✓ (Accept any other correct relevant response) (2 x 1) (2) 3.1.2 How can climate change negatively affect food prices? Droughts, floods and extreme heat reduce agricultural output ✓✓, which reduces the supply of food and pushes up food prices. ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 3.2.1 Identify the curve that has shifted in the graph above. Aggregate demand (AD) curve ✓ (1) 3.2.2 Name the price index that measures changes in prices of goods and services bought by households. Consumer price index (CPI) ✓ (1) 3.2.3 Briefly describe the term demand-pull inflation. A continuous increase in the general price level caused by aggregate demand increasing faster than aggregate supply ✓✓ (Accept any other correct relevant response) (2) 3.2.4 Explain the effect of a decrease in the repo rate on aggregate demand. A lower repo rate makes borrowing cheaper, which increases consumption and investment spending, so aggregate demand increases ✓✓ (Accept any other correct relevant response) (2) 3.2.5 How can the government use fiscal policy to reduce demand-pull inflation? • By reducing government expenditure, which lowers aggregate demand ✓✓ • By increasing personal income tax so that households have less disposable income to spend ✓✓ • By increasing company tax, which reduces the funds available for investment spending ✓✓ • By increasing VAT on goods and services to discourage spending ✓✓ • By running a budget surplus/reducing the budget deficit ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over ### Page 9 Economics/P2 9 Hlayiso/Mock 2026 NSC – Marking Guidelines 3.3.1 Identify the year with the lowest number of domestic trips. 2024 ✓ (1) 3.3.2 Name the organisation responsible for marketing South Africa internationally. South African Tourism (SA Tourism) ✓ (1) 3.3.3 Briefly describe the term domestic tourism. Tourism activities of residents of a country who travel to places within their own country, outside their usual environment ✓✓ (Accept any other correct relevant response) (2) 3.3.4 Explain how an increase in foreign tourist arrivals affects the current account of the balance of payments. Spending by foreign tourists is recorded as an export of services (receipts), so the balance on the current account improves (deficit decreases/surplus increases) ✓✓ (Accept any other correct relevant response) (2) 3.3.5 Calculate the percentage change in total tourism spending from 2024 to 2025. new − old 100 Percentage change = × old 1 1 820 − 1 610 100 = × ✓✓ 1 610 1 210 = × 100 ✓ 1 610 = 13,04% ✓ (accept 13%) (4) Copyright reserved Please turn over ### Page 10 Economics/P2 10 Hlayiso/Mock 2026 NSC – Marking Guidelines 3.4 Briefly discuss the effects of high inflation on borrowers and on people who earn a fixed income. Borrowers • Borrowers benefit because they repay loans with money that has a lower purchasing power than the money they borrowed ✓✓ • The real value of debt decreases if the interest rate is lower than the inflation rate (negative real interest rate) ✓✓ • However, the SARB may raise the repo rate to fight inflation, which increases the cost of new and variable-rate loans ✓✓ • Higher repayments may lead to over-indebtedness and repossession of assets ✓✓ (Max. 4) Fixed-income earners (e.g. pensioners) • The purchasing power of a fixed income declines as prices rise, so their real income falls ✓✓ • Pensioners can afford fewer goods and services and their standard of living declines ✓✓ • They may have to use their savings to pay for basic needs, which reduces the real value of their savings ✓✓ • Fixed-income earners have little bargaining power to adjust their income to inflation ✓✓ (Max. 4) (Accept any other correct relevant response) (A maximum of 4 marks may be allocated for mere listing of facts/examples) (2 x 4) (8) Copyright reserved Please turn over ### Page 11 Economics/P2 11 Hlayiso/Mock 2026 NSC – Marking Guidelines 3.5 Evaluate the effectiveness of environmental taxes, such as the carbon tax, in achieving environmental sustainability in South Africa. Effective: • Environmental taxes make polluters pay for the external cost they cause (polluter-pays principle), which discourages pollution ✓✓ • Higher costs give businesses an incentive to switch to cleaner technologies and renewable energy ✓✓ • The tax revenue can be used to fund environmental projects, e.g. rehabilitation of polluted areas ✓✓ • Taxes such as the plastic bag levy have changed consumer behaviour by reducing the use of plastic bags ✓✓ Less effective: • Large firms may simply pass the tax on to consumers through higher prices instead of reducing pollution ✓✓ • It is difficult to measure the exact external cost of pollution, so the tax rate may be set too low ✓✓ • Tax-free allowances and low rates may weaken the incentive to reduce emissions ✓✓ • Higher energy costs may reduce the competitiveness of South African exports and lead to job losses ✓✓ • Taxes on fuel and electricity are regressive and place a burden on poor households ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (4 x 2) (8) [40] Copyright reserved Please turn over ### Page 12 Economics/P2 12 Hlayiso/Mock 2026 NSC – Marking Guidelines QUESTION 4: MICROECONOMICS AND CONTEMPORARY ECONOMIC ISSUES 40 MARKS – 30 MINUTES 4.1.1 Name any TWO examples of merit goods. • Education ✓ • Health care (clinics, hospitals) ✓ • Vaccinations/immunisation ✓ • Public libraries ✓ • Museums ✓ (Accept any other correct relevant response) (2 x 1) (2) 4.1.2 How can tourism create employment opportunities in rural areas? Tourism is labour-intensive: lodges, game reserves, cultural villages and craft markets in rural areas employ local people as guides, cooks and craft sellers ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 4.2.1 Identify the line that represents a perfectly equal distribution of income. Line X / the line of equality (45◦ line) ✓ (1) 4.2.2 Percentage of income earned by the poorest 40% of the population. 6% ✓ (1) 4.2.3 Briefly describe the term Gini coefficient. A numerical measure of income inequality that ranges from 0 (perfect equality) to 1 (perfect inequality) ✓✓ (Accept any other correct relevant response) (2) 4.2.4 Explain the change in the position of curve Y if income inequality decreases. Curve Y (the Lorenz curve) will move closer to line X (the line of equality), so area A becomes smaller ✓✓ (Accept any other correct relevant response) (2) 4.2.5 Calculate the Gini coefficient for Country Z. Area A Gini coefficient = Area A + Area B 0,30 = ✓✓ 0,30 + 0,20 0,30 = ✓ 0,50 = 0,6 ✓ (4) 4.3.1 Identify the type of pollution illustrated in the cartoon. Air pollution ✓ (1) Copyright reserved Please turn over ### Page 13 Economics/P2 13 Hlayiso/Mock 2026 NSC – Marking Guidelines 4.3.2 Name the international agreement adopted in 2015 to limit global warming. Paris Agreement ✓ (1) 4.3.3 Briefly describe the term environmental sustainability. The ability of the environment to continue to provide resources and absorb waste for present and future generations by using it in a way that does not deplete or damage it ✓✓ (Accept any other correct relevant response) (2) 4.3.4 Explain why the factory owner ignores the cost of pollution when deciding how much to produce. The cost of pollution is an external cost borne by third parties (the community), not by the factory, so it does not form part of the firm’s private costs ✓✓ (Accept any other correct relevant response) (2) 4.3.5 How can the government use command-and-control measures to reduce pollution? • By setting quantity standards that limit the amount of pollutants a factory may emit ✓✓ • By setting quality standards, e.g. requiring filters/scrubbers on chimneys ✓✓ • By issuing permits/licences only to businesses that comply with emission standards ✓✓ • By inspecting businesses and imposing fines or closing those that exceed the limits ✓✓ • By requiring environmental (social) impact assessments before new factories are approved ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over ### Page 14 Economics/P2 14 Hlayiso/Mock 2026 NSC – Marking Guidelines 4.4 With the aid of a correctly labelled graph, explain the effect of a minimum price set above the equilibrium price. Price S surplus a b Pmin minimum price Pe e D 0 Q1 Qe Q2 Quantity Allocation of marks: correct labelling of axes = 1; correct drawing and labelling of demand and supply curves = 1; minimum price correctly drawn above equilibrium = 1; correct indication of surplus (Q1 Q2 ) = 1 (Max. 4) Explanation: • The market is initially in equilibrium at point e, where the price is Pe and the quantity is Qe ✓✓ • The government sets a minimum price (Pmin) above the equilibrium price to protect producers’ incomes ✓✓ • At the higher price, the quantity demanded decreases to Q1 while the quantity supplied increases to Q2 ✓✓ • This creates a surplus (excess supply) of Q1 Q2 ✓✓ • The government may have to buy and store the surplus or export it, which is costly ✓✓ • Consumers pay a higher price and buy less of the product ✓✓ (Accept any other correct relevant response) (Max. 4) (8) Copyright reserved Please turn over ### Page 15 Economics/P2 15 Hlayiso/Mock 2026 NSC – Marking Guidelines 4.5 Analyse the monetary policy measures that the SARB can use to keep inflation within the target range. • The SARB can increase the repo rate, which makes borrowing more expensive and reduces consumer and investment spending ✓✓ • Higher interest rates encourage households to save rather than spend, which reduces aggregate demand ✓✓ • Open-market transactions: the SARB can sell government bonds/securities to absorb excess money from the economy ✓✓ • The SARB can increase the cash reserve requirement for banks, which reduces their ability to create credit ✓✓ • Moral suasion: the SARB can persuade banks to be cautious when granting credit ✓✓ • Clear communication of the inflation target (3–6%) anchors inflation expectations of wage and price setters ✓✓ • Higher interest rates may attract foreign capital, appreciating the rand and making imports cheaper ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (4 x 2) (8) [40] TOTAL SECTION B: 80 Copyright reserved Please turn over ### Page 16 Economics/P2 16 Hlayiso/Mock 2026 NSC – Marking Guidelines SECTION C QUESTION 5: MICROECONOMICS 40 MARKS – 40 MINUTES Discuss in detail, with the aid of correctly labelled graphs, the short-run equilibrium positions of a firm in a perfectly competitive market where the firm makes an economic profit and an economic loss. (26 marks) Why is a perfectly competitive market regarded as more efficient than a monopoly? (10 marks) INTRODUCTION A perfect market is a market structure with a large number of buyers and sellers of a homogeneous product, in which no single participant can influence the market price ✓✓/ Equilibrium is the output level at which the firm maximises profit, where MR = MC. ✓✓ (Accept any other correct relevant introduction) (Max. 2) BODY: MAIN PART The perfectly competitive firm ✓ • The firm is a price taker: the price is determined by market demand and supply ✓✓ • The firm’s demand curve is horizontal (perfectly elastic) at the market price, so D = AR = MR ✓✓ • The firm maximises profit at the output where MR = MC, with MC rising ✓✓ • Whether the firm makes an economic profit or loss depends on the relationship between AR (price) and AC at this output ✓✓ Economic profit ✓ Price/Cost/Revenue economic profit MC e P D = AR = MR AC C 0 Q Quantity • The firm is in equilibrium at point e, where MR = MC, and produces quantity Q at price P ✓✓ • At output Q, average revenue (P) is greater than average cost (C) ✓✓ • The firm makes an economic (supernormal) profit equal to the shaded area PeC ✓✓/ TR (P x Q) is greater than TC (C x Q) ✓✓ • Economic profit attracts new firms into the industry because there are no barriers to entry ✓✓ • Market supply increases and the market price falls until only normal profit is made in the long run ✓✓ Copyright reserved Please turn over ### Page 17 Economics/P2 17 Hlayiso/Mock 2026 NSC – Marking Guidelines Allocation of marks (each graph): correct labelling of axes = 1; correct drawing and labelling of cost curves (MC cuts AC at its lowest point) = 1; correct positioning and labelling of D = AR = MR = 1; correct indication of economic profit/loss = 1 (Max. 4 per graph) Economic loss ✓ Price/Cost/Revenue MC economic loss AC C AVC P D = AR = MR e 0 Q Quantity • The firm is in equilibrium at point e where MR = MC, producing quantity Q at price P ✓✓ • At output Q, average cost (C) is greater than average revenue (P) ✓✓ • The firm makes an economic loss equal to the shaded area CP x Q / TC is greater than TR ✓✓ • The firm will continue to produce in the short run as long as the price covers average variable cost (AR ≥ AVC), because it can then pay part of its fixed costs ✓✓ • If the price falls below the minimum AVC (shutdown point), the firm will stop production ✓✓ • In the long run some firms leave the industry, market supply decreases and the price rises until normal profit is made ✓✓ Normal profit (for completeness) • If AR = AC at the output where MR = MC, the firm makes a normal profit; TR = TC and the entrepreneur earns just enough to stay in the industry ✓✓ (Accept any other correct relevant response) (A maximum of 8 marks may be allocated for headings/examples) (Max. 26) ADDITIONAL PART • A perfectly competitive firm achieves allocative efficiency because it produces where P = MC, so goods are produced in the quantities that consumers want ✓✓ • It achieves productive efficiency in the long run because it produces at the lowest point of the AC curve ✓✓ • A monopolist restricts output and charges a higher price (P > MC), which leads to a welfare (deadweight) loss ✓✓ • Consumers in a perfect market pay lower prices and buy larger quantities than under a monopoly ✓✓ • Competition forces firms to use resources efficiently, otherwise they make losses and leave the market ✓✓ • A monopolist is protected by barriers to entry and can make economic profit in the long run, while perfectly competitive firms only earn normal profit ✓✓ Copyright reserved Please turn over ### Page 18 Economics/P2 18 Hlayiso/Mock 2026 NSC – Marking Guidelines • Consumer sovereignty is maintained in a perfect market because consumers have full information and many sellers to choose from ✓✓ • However, a monopoly may benefit from economies of scale and spend more on research and development, which perfectly competitive firms cannot afford ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (Max. 10) CONCLUSION Although perfect competition rarely exists in reality, it is the benchmark against which the efficiency of other market structures is measured, which is why the government uses competition policy to promote competition. ✓✓ (Accept any other correct relevant higher-order conclusion) (Max. 2) [40] Copyright reserved Please turn over ### Page 19 Economics/P2 19 Hlayiso/Mock 2026 NSC – Marking Guidelines QUESTION 6: CONTEMPORARY ECONOMIC ISSUES 40 MARKS – 40 MINUTES Discuss in detail the measures (approaches) that the state can use to ensure environmental sustainability. (26 marks) How successful has South Africa been in ensuring environmental sustainability? (10 marks) INTRODUCTION Environmental sustainability means using the environment to meet present needs in a way that does not reduce the ability of future generations to meet their needs ✓✓/ It is the ability of the environment to survive its use for economic activity. ✓✓ (Accept any other correct relevant introduction) (Max. 2) BODY: MAIN PART MARKET-BASED APPROACHES ✓ Charges / environmental taxes ✓ • Environmental taxes are levied on activities that damage the environment, e.g. the carbon tax and fuel levies ✓✓ • They force polluters to include external costs in their private costs (polluter-pays principle) ✓✓ • Higher costs give firms an incentive to reduce pollution and invest in cleaner technology ✓✓ • Charges for the use of the environment, e.g. entrance fees to national parks, raise funds for conservation ✓✓ Marketable permits ✓ • The state sets a maximum amount of pollution and issues permits that allow firms to emit a certain quantity ✓✓ • Firms that pollute less can sell their unused permits to firms that need more ✓✓ • This rewards firms that reduce pollution and ensures that the total level of pollution is limited ✓✓ Property rights ✓ • When resources are owned, the owners have an incentive to protect them and use them sustainably ✓✓ • Communities that own land or wildlife can earn income from it (e.g. through ecotourism) and therefore conserve it ✓✓ Environmental subsidies ✓ • Subsidies are paid to firms or households that use environmentally friendly methods, e.g. solar panels and recycling ✓✓ • Subsidies lower the cost of clean technologies and encourage their use ✓✓ COMMAND-AND-CONTROL APPROACHES ✓ • The state sets standards and enforces them through laws, inspections and penalties ✓✓ • Quantity standards limit the quantity of pollutants that may be released, e.g. emission limits ✓✓ • Quality standards prescribe the quality of inputs or outputs, e.g. cleaner fuels or the quality of water released into rivers ✓✓ • Social impact standards require environmental impact assessments before projects are approved ✓✓ • Firms that do not comply can be fined, lose their licences or be closed down ✓✓ Copyright reserved Please turn over ### Page 20 Economics/P2 20 Hlayiso/Mock 2026 NSC – Marking Guidelines EDUCATION ✓ • Awareness campaigns inform people about the effects of pollution, littering and wasteful use of water and energy ✓✓ • Environmental education in schools changes the behaviour of future generations ✓✓ • Informed consumers can pressure firms to produce in an environmentally friendly way ✓✓ VOLUNTARY AGREEMENTS ✓ • The state and businesses may agree voluntarily to reduce pollution or recycle packaging ✓✓ • Firms may also adopt green practices to improve their public image ✓✓ INTERNATIONAL AGREEMENTS ✓ • The state signs and implements agreements such as the Paris Agreement, the Montreal Protocol and the Basel Convention to address cross-border environmental problems ✓✓ (Accept any other correct relevant response) (A maximum of 8 marks may be allocated for headings/examples) (Max. 26) ADDITIONAL PART Successes: • South Africa introduced a carbon tax in 2019 to discourage greenhouse gas emissions ✓✓ • The plastic bag levy has reduced the use of plastic shopping bags ✓✓ • Laws such as the National Environmental Management Act (NEMA) provide a framework for protecting the environment ✓✓ • Large areas are protected as national parks and World Heritage Sites, which conserve biodiversity and support ecotourism ✓✓ • Renewable energy programmes have increased the share of wind and solar power in electricity generation ✓✓ • Programmes such as Working for Water create jobs while removing invasive alien plants ✓✓ Shortcomings: • South Africa still relies heavily on coal to generate electricity, which makes it one of the larger emitters of greenhouse gases ✓✓ • Weak enforcement of environmental laws allows illegal dumping and pollution of rivers to continue ✓✓ • Poaching of rhinos and other endangered species threatens biodiversity ✓✓ • Poorly maintained sewage plants pollute rivers and dams ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (Max. 10) CONCLUSION South Africa has a strong legal framework for environmental sustainability, but its success depends on stricter enforcement and a faster move away from coal towards renewable energy. ✓✓ (Accept any other correct relevant higher-order conclusion) (Max. 2) [40] TOTAL SECTION C: 40 GRAND TOTAL: 150 Copyright reserved ## Related documents - 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