Economics Grade 12 P2 NSC November Prediction 2026 Memo

hlayiso mock exams Practice Series: Grade 12 NSC Preparation WWW.HLAYISO.COM NATIONAL SENIOR CERTIFICATE GRADE 12 ECONOMICS P2 PREDICTION EXAMINATION 2026 MARKING GUIDELINES MARKS: 150 These marking guidelines consist of 20 pages. Copyright reserved Please turn over

Economics/P2 2 Hlayiso/Prediction 2026 NSC – Marking Guidelines PRINCIPLES FOR MARKING ECONOMICS (HLAYISO PREDICTION 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 and give are read in context. • Calculations: award marks for the formula/method and substitution, and 1 mark for the correct final answer. If only the correct answer is given without workings, award 2 of the 4 marks (CA: carry an error forward once). • 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. Copyright reserved Please turn over

Economics/P2 3 Hlayiso/Prediction 2026 NSC – Marking Guidelines SECTION A (COMPULSORY) QUESTION 1 30 MARKS – 20 MINUTES 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 B – elastic ✓✓ 1.1.2 B – natural ✓✓ 1.1.3 A – greater than ✓✓ 1.1.4 C – kinked ✓✓ 1.1.5 B – producer price index ✓✓ 1.1.6 C – administered ✓✓ 1.1.7 B – same-day visitors ✓✓ 1.1.8 B – Kyoto Protocol ✓✓ (8 x 2) (16) 1.2 MATCHING ITEMS 1.2.1 B – the point at which a firm’s average revenue is equal to its minimum average variable cost ✓ 1.2.2 F – a group of businesses that formally agree to fix prices or share markets ✓ 1.2.3 H – a value given to a cost or benefit for which no market price exists ✓ 1.2.4 E – people who enjoy the benefits of a good without paying for it ✓ 1.2.5 I – inflation that excludes items with highly volatile prices from the CPI ✓ 1.2.6 C – an extremely high rate of inflation, e.g. more than 50% per month ✓ 1.2.7 G – travel to natural areas that conserves the environment and benefits local people ✓ 1.2.8 A – the careful use and management of natural resources so that they remain available for future generations ✓ (8 x 1) (8) 1.3 GIVE THE TERM 1.3.1 Price discrimination ✓ 1.3.2 Sunk costs ✓ 1.3.3 (Producer) subsidy ✓ 1.3.4 Basket of goods and services (CPI basket) ✓ 1.3.5 Domestic tourism ✓ 1.3.6 Greenhouse gases ✓ (6 x 1) (6) [30] TOTAL SECTION A: 30 Copyright reserved Please turn over

Economics/P2 4 Hlayiso/Prediction 2026 NSC – Marking Guidelines SECTION B QUESTION 2: MICROECONOMICS 40 MARKS – 30 MINUTES 2.1.1 Give any TWO examples of variable costs. • Raw materials ✓ • Wages of casual/temporary workers ✓ • Electricity and water used in production ✓ • Fuel and transport costs ✓ • Packaging ✓ • Commission paid on sales ✓ (Accept any other correct relevant response) (2 x 1) (2) 2.1.2 Why does the government often regulate the prices charged by natural monopolies? Natural monopolies have no competitors and supply essential services (e.g. electricity, water), so without regulation they could charge excessively high prices and exploit consumers ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 2.2.1 Identify the market price in the graph above. R40 ✓ (1) 2.2.2 Name ONE example of a market in South Africa that comes close to being a perfect market. • Fresh produce markets / agricultural products (e.g. maize, fruit and vegetables) ✓ • The JSE / share (stock) market ✓ • Foreign exchange market ✓ (Accept any other correct relevant response) (1) 2.2.3 Briefly describe the term normal profit. The minimum earnings required to keep the entrepreneur in the industry, earned when total revenue equals total cost (AR = AC) ✓✓ (Accept any other correct relevant response) (2) 2.2.4 Explain why the individual firm cannot sell its product above the market price. The firm is a price taker: there are many sellers of an identical (homogeneous) product and buyers have perfect information, so if the firm charges more than R40 buyers will buy from other sellers and the firm will sell nothing ✓✓ (Accept any other correct relevant response) (2) Copyright reserved Please turn over

Economics/P2 5 Hlayiso/Prediction 2026 NSC – Marking Guidelines 2.2.5 Calculate the economic profit made by the individual firm. Economic profit = TR – TC = (P x Q) – (AC x Q) = (R40 x 300) – (R32 x 300) ✓ ✓ = R12 000 – R9 600 ✓ = R2 400 ✓ OR (AR – AC) x Q = (R40 – R32) x 300 ✓ ✓= R8 x 300 ✓= R2 400 ✓ (4) 2.3.1 Identify the institution that recommended that the merger be prohibited. Competition Commission ✓ (1) 2.3.2 Name the court to which the firms can appeal. Competition Appeal Court ✓ (1) 2.3.3 Briefly describe the term merger. When two or more businesses combine (join together) to form a single business / when one firm acquires control over another ✓✓ (Accept any other correct relevant response) (2) 2.3.4 Explain why a firm that controls a large share of a market may harm consumers. • A dominant firm faces little competition, so it can raise prices above the competitive level and restrict output ✓✓ • Consumers have less choice and the firm has little incentive to improve quality or service ✓✓ (Accept any other correct relevant response) (2) 2.3.5 How can the decision of the Competition Tribunal benefit dairy farmers and consumers? • Farmers keep more buyers for their raw milk, so they can negotiate better prices ✓✓ • Farmers are protected from a single dominant buyer that could force down the prices it pays ✓✓ • Consumers benefit from continued competition between the processors, which keeps milk prices lower ✓✓ • Competing processors are encouraged to improve quality and offer a wider variety of products ✓✓ • Smaller processors and new entrants have a fairer chance to compete in the market ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over

Economics/P2 6 Hlayiso/Prediction 2026 NSC – Marking Guidelines 2.4 With the aid of a correctly labelled graph, explain the shut-down point of a firm in a perfectly competitive market. Price/Cost/Revenue MC AC AVC A P1 D = AR = MR shut-down point 0 Q1 Quantity Allocation of marks: correct labelling of axes = 1; correct drawing and labelling of cost curves (MC cuts AVC and AC at their lowest points) = 1; correct positioning and labelling of D = AR = MR at the minimum of AVC = 1; correct indication of the shut-down point = 1 (Max. 4) Explanation: • The shut-down point is at point A, where the price (AR = MR) is equal to the minimum average variable cost (AVC) and MR = MC ✓✓ • At price P1 the firm covers only its variable costs and makes a loss equal to its fixed costs ✓✓ • If the price is above P1 (but below AC), the firm continues to produce in the short run because it covers all its variable costs and part of its fixed costs ✓✓ • If the price falls below P1 , the firm cannot cover its variable costs and will stop production, because its loss would be greater than its fixed costs ✓✓ • The part of the MC curve above the shut-down point (minimum AVC) is therefore the firm’s short-run supply curve ✓✓ (Accept any other correct relevant response) (Max. 4) (8) Copyright reserved Please turn over

Economics/P2 7 Hlayiso/Prediction 2026 NSC – Marking Guidelines 2.5 With reference to game theory, analyse why firms in an oligopoly may decide to collude rather than compete on price. • Game theory shows that oligopolists are mutually interdependent: the outcome of each firm’s decision depends on how its rivals react ✓✓ • In the prisoner’s dilemma, each firm’s best individual strategy is to cut its price, but if all firms cut prices they all end up with lower profits ✓✓ • Price wars reduce total revenue for all firms because rivals match price cuts (demand is relatively inelastic below the kink) ✓✓ • By colluding (co-operating) and keeping prices high, the firms can earn higher joint profits, similar to those of a monopoly ✓✓ • Collusion reduces uncertainty about rivals’ behaviour, which makes planning and investment easier ✓✓ • Firms may divide markets or follow a price leader so that they avoid costly competition ✓✓ • However, each firm has an incentive to cheat on the agreement, and collusion is illegal in South Africa and firms found guilty are fined by the Competition Tribunal (up to 10% of turnover) ✓✓ (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

Economics/P2 8 Hlayiso/Prediction 2026 NSC – Marking Guidelines QUESTION 3: CONTEMPORARY ECONOMIC ISSUES 40 MARKS – 30 MINUTES 3.1.1 Name any TWO categories of items that are excluded when core inflation is calculated. • Food and non-alcoholic beverages ✓ • Fuel (petrol) ✓ • Energy / electricity ✓ (Accept any other correct relevant response, e.g. items with highly volatile prices) (2 x 1) (2) 3.1.2 How can tourism contribute to the conservation of the natural environment? Entrance fees and income from ecotourism provide funds to protect national parks and wildlife, and give communities an incentive to conserve natural areas rather than destroy them ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 3.2.1 Identify the category in which prices decreased. Transport (incl. fuel) ✓ (1) 3.2.2 Name the institution that compiles the CPI in South Africa. Statistics South Africa (Stats SA) ✓ (1) 3.2.3 Briefly describe the term headline inflation. The rate of increase in the consumer price index that includes all the items in the CPI basket (including volatile items such as food and fuel) ✓✓ (Accept any other correct relevant response) (2) 3.2.4 Explain why an increase in food prices affects poor households more than rich households. Poor households spend a much larger share of their income on food (food carries a higher weight in their consumption basket), so higher food prices reduce their real income and standard of living more ✓✓ (Accept any other correct relevant response) (2) 3.2.5 Calculate the headline inflation rate from August 2025 to August 2026. CPInew − CPIold 100 Inflation rate = × CPIold 1 107,3 − 104,0 100 = × ✓✓ 104,0 1 3,3 = × 100 ✓ 104,0 = 3,17% ✓ (accept 3,2%) (4) Copyright reserved Please turn over

Economics/P2 9 Hlayiso/Prediction 2026 NSC – Marking Guidelines 3.3.1 Identify the environmental problem caused by the removal of trees. Deforestation ✓ (1) 3.3.2 Name the international agreement that regulates trade in endangered species. Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) ✓ (1) 3.3.3 Briefly describe the term biodiversity. The variety of plant and animal species (living organisms) that exist in a particular area or ecosystem ✓✓ (Accept any other correct relevant response) (2) 3.3.4 Explain why the market fails to protect the forests in the Mthonjeni district. The forests are common property with no owner and no price, so users do not pay for the trees they remove and nobody has an incentive to protect them; the cost of deforestation is an external cost that the market ignores ✓✓ (Accept any other correct relevant response) (2) 3.3.5 How can education and awareness campaigns help to reduce environmental damage? • People learn about the long-term effects of pollution, deforestation and the loss of species, which changes their behaviour ✓✓ • Communities are taught sustainable practices, e.g. planting woodlots instead of cutting indigenous trees ✓✓ • Environmental education in schools creates responsible future citizens ✓✓ • Informed consumers put pressure on businesses to produce in an environmentally friendly way ✓✓ • People are encouraged to reduce, re-use and recycle waste ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over

Economics/P2 10 Hlayiso/Prediction 2026 NSC – Marking Guidelines 3.4 Briefly discuss administered prices and the depreciation of the exchange rate as causes of cost-push inflation. Administered prices • Administered prices are prices set or approved by the government or public authorities, e.g. electricity tariffs, water and municipal rates, fuel prices and public transport fares ✓✓ • These prices have often increased faster than the inflation target, which raises the production costs of businesses ✓✓ • Businesses pass the higher costs on to consumers in the form of higher prices ✓✓ • Because many administered prices are not influenced by the repo rate, the SARB finds it difficult to control this inflation ✓✓ (Max. 4) Depreciation of the exchange rate • When the rand depreciates, more rand is needed to buy foreign currency, so imported goods become more expensive ✓✓ • Imported inputs such as crude oil, machinery and spare parts become more expensive, which increases production costs ✓✓ • Higher fuel prices increase transport costs throughout the economy ✓✓ • Producers raise their prices to cover the higher costs, which increases the general price level ✓✓ (Max. 4) (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (2 x 4) (8) Copyright reserved Please turn over

Economics/P2 11 Hlayiso/Prediction 2026 NSC – Marking Guidelines 3.5 Analyse how market-based measures can be used to ensure environmental sustainability. • Environmental taxes (e.g. carbon tax, fuel levies) make polluters pay for the external costs they cause, which encourages them to reduce pollution ✓✓ • Taxes raise the price of environmentally harmful products, so consumers buy less of them ✓✓ • Tax revenue can be used to fund environmental rehabilitation and clean-up projects ✓✓ • Marketable permits: the state sets a limit on total pollution and issues permits that can be traded ✓✓ • Firms that reduce pollution can sell their unused permits, which rewards cleaner production ✓✓ • Property rights: when communities or individuals own resources, they have an incentive to use them sustainably and protect them ✓✓ • Owners can earn income from resources (e.g. ecotourism), which makes conservation profitable ✓✓ • Environmental subsidies lower the cost of environmentally friendly technologies, e.g. solar energy ✓✓ (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

Economics/P2 12 Hlayiso/Prediction 2026 NSC – Marking Guidelines QUESTION 4: MICROECONOMICS AND CONTEMPORARY ECONOMIC ISSUES 40 MARKS – 30 MINUTES 4.1.1 Give any TWO examples of public goods. • Street lights ✓ • National defence ✓ • Police services ✓ • Public roads/bridges ✓ • Lighthouses ✓ • Public parks ✓ (Accept any other correct relevant response) (2 x 1) (2) 4.1.2 How does high inflation affect fixed-income earners? Their nominal income stays the same while prices rise, so the purchasing power of their income (real income) decreases and their standard of living declines ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 4.2.1 Identify the equilibrium price of bread. R30 ✓ (1) 4.2.2 Give ONE reason why the government may set a maximum price on basic foodstuffs. • To make basic food affordable for poor households ✓ • To protect consumers against exploitation/high prices ✓ • To reduce poverty and inequality ✓ • To control (reduce) inflation ✓ (Accept any other correct relevant response) (1) 4.2.3 Briefly describe the term maximum price. A price set by the government below the equilibrium price, above which a product may not legally be sold ✓✓ (Accept any other correct relevant response) (2) 4.2.4 Explain why a black market may develop when a maximum price is set. At the maximum price the quantity demanded (800 000) exceeds the quantity supplied (400 000), so some consumers are willing to pay more than the legal price and sellers sell the product illegally at higher prices ✓✓ (Accept any other correct relevant response) (2) Copyright reserved Please turn over

Economics/P2 13 Hlayiso/Prediction 2026 NSC – Marking Guidelines 4.2.5 How can the government reduce the shortage created by the maximum price? • By paying subsidies to bakeries/producers so that they can increase supply at the lower price ✓✓ • By releasing stock from government reserves or importing more of the product ✓✓ • By reducing taxes (e.g. VAT zero-rating) on the inputs/product to encourage production ✓✓ • By producing the product itself through state-owned enterprises ✓✓ (Accept any other correct relevant response) (2 x 2) (4) 4.3.1 Identify the World Heritage Site that is linked to the heritage route. Mapungubwe Cultural Landscape ✓ (1) 4.3.2 Name the type of tourism in which visitors experience the traditions and way of life of a community. Cultural tourism ✓(accept heritage tourism) (1) 4.3.3 Briefly describe the term indigenous knowledge systems. Knowledge, skills and practices that are unique to a particular community/culture and are passed on from one generation to the next ✓✓ (Accept any other correct relevant response) (2) 4.3.4 Explain how family-run homestays benefit village households. Households earn an income from accommodation and meals, which raises their standard of living and reduces poverty without large capital investment ✓✓ (Accept any other correct relevant response) (2) 4.3.5 How can the government support small tourism businesses in rural areas? • By providing grants and low-interest loans to small tourism enterprises ✓✓ • By training community members as guides, chefs and hospitality staff ✓✓ • By improving rural infrastructure such as roads, water, electricity and internet connections ✓✓ • By marketing rural routes and attractions locally and internationally ✓✓ • By reducing red tape and helping businesses to register and obtain grading/licences ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over

Economics/P2 14 Hlayiso/Prediction 2026 NSC – Marking Guidelines 4.4 Briefly discuss intangible costs and benefits and shadow prices as components of a cost-benefit analysis. Intangible costs and benefits • These are costs and benefits that cannot be measured easily in money terms because they have no market value ✓✓ • Examples are the loss of a beautiful view, noise, stress, or the improved sense of safety from a new street light ✓✓ • Because they are difficult to measure, they are often estimated or ignored, which can lead to wrong decisions ✓✓ • They must still be included so that the full social impact of a project is considered ✓✓ (Max. 4) Shadow prices • A shadow price is an estimated value given to a cost or benefit for which there is no market price ✓✓ • E.g. the value of time saved by commuters on a new road is estimated using their average wage per hour ✓✓ • Shadow prices allow intangible and external items to be included in the analysis ✓✓ • Market prices may be adjusted (e.g. for taxes, subsidies or unemployment) to reflect the true opportunity cost to society ✓✓ (Max. 4) (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (2 x 4) (8) Copyright reserved Please turn over

Economics/P2 15 Hlayiso/Prediction 2026 NSC – Marking Guidelines 4.5 Analyse the impact of high inflation on economic growth and on the balance of payments. Economic growth • High inflation creates uncertainty, so businesses postpone or reduce investment, which lowers economic growth ✓✓ • The SARB raises interest rates to fight inflation, which makes borrowing expensive and reduces spending and production ✓✓ • Savings are discouraged because their real value declines, which reduces the funds available for investment ✓✓ • Resources are diverted to speculative assets (e.g. property, gold) instead of productive investment ✓✓ • Strikes for higher wages may disrupt production and cause job losses ✓✓ Balance of payments • South African exports become more expensive and less competitive on world markets, so exports decline ✓✓ • Imports become relatively cheaper than local goods, so imports increase ✓✓ • The current account deficit widens (worsens) ✓✓ • Foreign investors may withdraw capital, which puts pressure on the exchange rate and leads to depreciation of the rand ✓✓ (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

Economics/P2 16 Hlayiso/Prediction 2026 NSC – Marking Guidelines SECTION C QUESTION 5: MICROECONOMICS 40 MARKS – 40 MINUTES Discuss in detail the causes of market failure. (26 marks) How effective is the national minimum wage in reducing the unequal distribution of income in South Africa? (10 marks) INTRODUCTION Market failure occurs when the market forces of demand and supply fail to allocate resources efficiently, so that goods are over- or under-produced and society’s welfare is not maximised ✓✓ (Accept any other correct relevant introduction) (Max. 2) BODY: MAIN PART Externalities ✓ • Externalities are costs or benefits of production or consumption that affect third parties who are not involved in the transaction ✓✓ • Negative externalities (e.g. air pollution from a factory) are not included in the producer’s private costs, so the market over-produces the good at a price that is too low ✓✓ • Social cost = private cost + external cost; when MSC > MPC, too many resources are allocated to the good ✓✓ • Positive externalities (e.g. education, vaccinations) benefit society more than the individual, so the market under-produces them ✓✓ Public goods (missing markets) ✓ • Public goods are non-rival and non-excludable, e.g. street lights, national defence and lighthouses ✓✓ • Because people cannot be excluded from using them, consumers become free riders and are not willing to pay ✓✓ • Private businesses cannot make a profit from them, so the market does not supply them at all ✓✓ Merit and demerit goods ✓ • Merit goods (e.g. health care, education) are under-consumed because people undervalue their benefits or cannot afford them ✓✓ • Demerit goods (e.g. tobacco, alcohol) are over-consumed because people underestimate their harmful effects ✓✓ Imperfect competition (market power) ✓ • Monopolies, oligopolies and cartels restrict output and charge prices above marginal cost ✓✓ • Barriers to entry prevent new firms from entering, so resources are not allocated efficiently and consumers pay more ✓✓ Imperfect (lack of) information ✓ • Consumers may not know the quality or prices of products and may make wrong choices ✓✓ • Producers may lack information about markets, prices and production techniques ✓✓ • Workers may not know about job opportunities elsewhere ✓✓ Immobility of factors of production ✓ Copyright reserved Please turn over

Economics/P2 17 Hlayiso/Prediction 2026 NSC – Marking Guidelines • Labour may be unable to move to other areas or jobs because of family ties, housing costs or a lack of skills ✓✓ • Capital equipment is often specialised and cannot easily be used for other purposes ✓✓ • Land is geographically immobile, so resources cannot move to where they are most needed ✓✓ Imperfect distribution of income and wealth ✓ • The market rewards people according to the factors of production they own, so people without skills or assets earn low incomes ✓✓ • Because demand reflects purchasing power, the market produces luxuries for the rich while the poor cannot afford basic needs ✓✓ Technological change / time lags ✓ • Markets respond slowly to changes in demand; e.g. it takes years to train doctors or build new factories, so shortages or surpluses persist ✓✓ (Accept any other correct relevant response) (A maximum of 8 marks may be allocated for headings/examples) (Max. 26) ADDITIONAL PART Effective: • The national minimum wage (in force since 2019) sets a legal floor for the lowest-paid workers, e.g. farm and domestic workers, which raises their income ✓✓ • It reduces the exploitation of vulnerable workers who have little bargaining power ✓✓ • Higher incomes for the poorest workers narrow the gap between low and high earners and can reduce the Gini coefficient ✓✓ • Low-income households spend most of their extra income, which increases demand and supports local businesses ✓✓ Less effective: • It does not help the unemployed, who are the poorest group in South Africa ✓✓ • If the minimum wage is set above the equilibrium wage, the quantity of labour demanded falls and some low-skilled workers may lose their jobs ✓✓ • Small businesses may not afford the higher wages and may close or move into the informal sector ✓✓ • Enforcement is weak, so many employers, especially in the informal sector, do not comply ✓✓ • Employers may replace workers with machines (capital-intensive production) ✓✓ • Inequality in South Africa is mainly caused by unequal ownership of wealth and skills, which a minimum wage does not change ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (Max. 10) CONCLUSION Market failure means that the price mechanism alone cannot achieve an efficient and fair allocation of resources; state intervention is necessary, but it must be well designed, because measures such as the minimum wage can also have unintended consequences. ✓✓ (Accept any other correct relevant higher-order conclusion) (Max. 2) [40] Copyright reserved Please turn over

Economics/P2 18 Hlayiso/Prediction 2026 NSC – Marking Guidelines QUESTION 6: CONTEMPORARY ECONOMIC ISSUES 40 MARKS – 40 MINUTES Discuss in detail the effects of tourism on gross domestic product (GDP), employment, poverty, infrastructure and the environment. (26 marks) Evaluate the success of South Africa’s policy initiatives in promoting tourism. (10 marks) INTRODUCTION Tourism refers to the activities of people who travel to and stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes ✓✓ (Accept any other correct relevant introduction) (Max. 2) BODY: MAIN PART Gross domestic product (GDP) ✓ • Spending by domestic and foreign tourists on accommodation, transport, food and attractions adds directly to GDP ✓✓ • Tourism has a large multiplier effect: income earned in tourism is spent in other sectors, e.g. agriculture, manufacturing and retail ✓✓ • Foreign tourist spending is an export of services that earns foreign exchange and improves the balance of payments ✓✓ • Tourism attracts investment in hotels, conference centres and attractions, which increases production capacity ✓✓ • The government earns more tax revenue (VAT, income tax, airport taxes) from tourism activities ✓✓ Employment ✓ • Tourism is labour-intensive and creates many jobs for guides, chefs, drivers, cleaners and hotel staff ✓✓ • Many tourism jobs require relatively low skills and short training, so they are accessible to young and unemployed people ✓✓ • Tourism creates opportunities for small businesses and entrepreneurs, e.g. guesthouses, craft markets and tour operators ✓✓ • Indirect jobs are created in industries that supply the tourism sector ✓✓ • However, many tourism jobs are seasonal and poorly paid ✓✓ Poverty ✓ • Tourism brings income to rural and remote areas where there are few other economic activities ✓✓ • Local communities earn income from selling crafts, cultural performances, homestays and community-owned lodges ✓✓ • Income from tourism improves access to food, health care and education, which raises the standard of living ✓✓ • Tourism promotes the use of indigenous knowledge, which allows communities to earn an income from their culture ✓✓ Infrastructure ✓ • The government and private sector build and maintain roads, airports, water, electricity and communication networks to serve tourists ✓✓ • Local communities also benefit from the improved infrastructure, e.g. better roads and clinics ✓✓ • Improved infrastructure attracts other businesses and investment to the area ✓✓ Copyright reserved Please turn over

Economics/P2 19 Hlayiso/Prediction 2026 NSC – Marking Guidelines • However, infrastructure may be overloaded during peak seasons and requires costly maintenance ✓✓ Environment ✓ • Positive: income from ecotourism and park fees is used to conserve wildlife, forests and heritage sites ✓✓ • Communities are encouraged to protect the natural environment because it is their source of income ✓✓ • Negative: large numbers of tourists cause pollution, littering, noise and pressure on water supplies ✓✓ • Building of resorts may destroy natural habitats and lead to a loss of biodiversity ✓✓ • Tourist activities may damage sensitive ecosystems, e.g. coral reefs and dunes ✓✓ (Accept any other correct relevant response) (A maximum of 8 marks may be allocated for headings/examples) (Max. 26) ADDITIONAL PART Successes: • South African Tourism markets the country internationally through campaigns, trade shows and events such as the annual Africa’s Travel Indaba ✓✓ • Domestic tourism is promoted through campaigns and Tourism Month (September), which encourages South Africans to travel locally ✓✓ • Funding programmes (e.g. the Tourism Transformation Fund) give emerging, black-owned tourism businesses access to finance ✓✓ • The tourism grading system improves and guarantees the quality of accommodation ✓✓ • The development of World Heritage Sites, national parks and cultural routes has diversified the tourism product ✓✓ • Hosting major sport and business events has increased international awareness of South Africa ✓✓ Shortcomings: • High levels of crime and safety concerns discourage foreign tourists despite marketing campaigns ✓✓ • Visa requirements and slow processing have made it difficult for tourists from some key markets to visit ✓✓ • Poor maintenance of infrastructure, e.g. roads, and unreliable electricity and water supply reduce competitiveness ✓✓ • Rural communities still benefit relatively little, as tourism income is concentrated in a few major cities and large businesses ✓✓ • South Africa is a long-haul destination and air travel is expensive ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (Max. 10) Copyright reserved Please turn over

Economics/P2 20 Hlayiso/Prediction 2026 NSC – Marking Guidelines CONCLUSION Tourism can be a major driver of growth, jobs and poverty reduction in South Africa, but its benefits will only be fully realised if safety, infrastructure and the inclusion of rural communities are improved and the environment is protected for future visitors. ✓✓ (Accept any other correct relevant higher-order conclusion) (Max. 2) [40] TOTAL SECTION C: 40 GRAND TOTAL: 150 Copyright reserved