Grade 11 Microeconomics & Contemporary Economic Issues Essays 2023
Grade 11 Microeconomics & Contemporary Economic Issues Essays 2023
Grade 11 Microeconomics & Contemporary Economic Issues Essays 2023
MICROECONOMICS
AND
CONTEMPORARY ECONOMIC ISSUES
ESSAYS 2023-…
Advise learners NOT TO FOCUS on essays only since essay
consist of 27% and section B 53% and Section A 20 % per paper
Compiled by Noel M.Mashonga
Topic Page Question
NOVEMBER SCOPE ESSAY 2 -
STRUCTURE OF ESSAY 3
MICROECONOMICS
5 RELATIONSHIP BETWEEN MARKETS 4-30 5
7 PRICE ELASTICITY 31-38
CONTEMPORARY ECONOMIC ISSUES
11 GLOBALISATION 39-45 6
12 ENVIRONMENTAL DETERIORATION 46-48
From each according to his ability, to each according to his needs. - Karl Marx
GAUTENG
P a g e 1 | 48
GRADE 11
ECONOMICS
NOVEMBER 2023 SCOPE ESSAYS
PAPER 1 PAPER 2
QUESTION 5: QUESTION 5:
MACROECONOMICS MICROECONOMICS
- Discuss in detail natural resources - Discuss the demand and supply
as factor of production relationships with the aid of graphs in
(characteristics, importance, factors detail (substitutes and compliments)
affecting rent) - Discuss in detail the characteristics of
- Discuss in detail entrepreneurial perfect competition, and monopoly.
skills as factor of production. - Discuss in detail the price elasticity of
- Compare and contrast the South demand with the aid of graphs. (PED)
Africa mixed economy with a - Discuss in detail the price elasticity of
centrally planned. demand without the aid of graphs.
- Discuss in detail the economic (PED)
importance of the tertiary sector.
- Discuss in detail South Africa’s
infrastructure and its economic
importance
QUESTION 6: QUESTION 6:
ECONOMIC PURSUITS CONTEMPORAY ECONOMIC ISSUES
❖ Discuss in detail the different ❖ Examine in detail the causes and
methods used to redistribute income consequences of globalisation.
and wealth. ❖ Examine in detail the state of
❖ Discuss in detail the characteristics environment/problems threating the
of developing countries. environment.
❖ Discuss in detail the functions of the
South Africa’s Reserve Bank as a
Central bank
P a g e 2 | 48
MARK
STRUCTURE OF ESSAY
ALLOCATION
Introduction
The introduction is a lower-order response. Max. 2
• A good starting point would be to define the main concept related to
the question topic.
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body.
• Avoid mentioning in the introduction what you are going to discuss in
the body.
Body
Main part: Discuss in detail/In-depth discussion/Examine/Critically Max. 26
discuss/ Analyse/Compare/Evaluate/Distinguish/Differentiate/Explain/Draw
a graph and explain/Use the graph given and explain/Complete the given
graph/Assess/Debate
A maximum of 8 marks may be allocated for headings/examples Max. 10
Additional part: Critically discuss/Evaluate/Critically evaluate/Debate/
Deduce/Compare/Distinguish/Interpret/How? /Suggest
A maximum of 2 marks may be allocated for mere listing facts.
Conclusion
Any higher-order conclusion should include: Max. 2
• A brief summary of what has been discussed without repeating facts
already mentioned
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40
P a g e 3 | 48
TOPIC 5: RELATIONSHIP BETWEEN MARKETS
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in detail the demand and supply relationships with the aid of
graphs. (26 marks)
• How dependent is the product market on the factor market? (10 marks)
INTRODUCTION
A substitute is a good that can be used in the place of another good ✓✓
(Accept any other correct relevant introduction) (Max. 2)
BODY: MAIN PART
Demand for substitutes
• An increase in the price of a good increases the demand and the price of the
substitute good, ceteris paribus, and vice versa ✓✓
• The consumer can switch between the two goods and maintain the same degree
of satisfaction ✓✓
• The above graphs shows the markets for two goods, Product A and Product
B✓✓
• The equilibrium price of Product A is R12, while that of Product B is R7 ✓✓
• Assume there is a big decrease in the supply of Product A (So to S1)
because of a severe drought. This leads to an increase in Product A’s price to
R16✓✓
• The law of demand states that when prices increase (from R12 to R16) the
quantity demanded wil decrease (from 100 to 70) ✓✓
• Some consumers will switch from Product A to Product B✓✓
P a g e 4 | 48
• The demand curve for Product B will shift to the right (Do to D1) and the
equilibrium price will shift from R7 to R10✓✓
• While an increase in Product B also occurs, it is still relatively cheaper than
Product A (R10 relative to R16) ✓✓
• An increase in the price of Product A decreases the demand and the price of
the complementary good, Product B , ceteris paribus, and vice versa✓✓
• Consumers will buy less of product A and shifts the demand curve to the left
from D1 to D0 and, there is a decrease in the equilibrium price of Product
B✓✓
• They can lose business and revenue if the demand for their goods falls
without them being aware that it is going to happen✓✓
• Therefore they need to respond to the price changes that occur to other
goods that could affect them quite quickly✓✓
ADDITIONAL PART
P a g e 6 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
Discuss in detail the demand relationships with the aid of graphs.(26 marks)
Introductions
The quantity of a good or service that the consumes are able and willing to buy at a
specific price and at a specific time✓✓
Main body
• Demand implies that people will want to buy more of a product when the price
of product is lower, for example at a sale✓✓
• This inverse relationship between quantity demand and price is the reason for
the negative gradient of the demand curve ✓✓
• The demand curve is a line that slopes downwards from left to right✓✓
Substitutes
• Substitutes are products that can be used in the place of another
product✓✓
• A complement product on the other hand is used with another product ✓✓
• Some products have specific relationships that will affect demand e.g. if
you want to buy beef but it is too expensive, you will buy a cheaper
alternative✓✓
• When you decide to purchase chicken instead of beef, you buy the
substitute product✓✓
• Example of substitutes products are butter and margarine, coffee and tea
and diesel and petrol. (Remember maximum of 8 headings/examples)
• Consumers may purchase only one product for consumption. ✓✓
• A price increase in one product will cause a greater demand for the
substitute product. ✓✓
• E.g. when the price for butter goes up, you buy margarine instead ✓
P a g e 7 | 48
• Graph above shows an increase in the price of butter due to decrease in
supply✓✓
• The supply curve SS has shifted to the left to form S1S1✓✓
• The original price of butter was P and now the price is higher at P1✓✓
Complements
• Two products are complements products when you use them together to
satisfy a need or want✓✓
• E.g. complements are cell phone and airtime, bread and butter, tea and
sugar, a motor car and petrol because you need both. ✓
• Complement products are used jointly because the use of one requires the
use of the other to be compete. ✓✓
• When the price increases for one product, the demand will decrease for that
product as well as for the complement product. ✓✓
• E.g. when the price of sugar increases, it will cause the demand for sugar and
tea to decrease✓
P a g e 8 | 48
• The above graph shows the price of sugar increases due to a decrease in
supply✓✓
• The supply curve S1S1 has shifted to the left to form S1S1✓✓
• The original price of sugar was P1 and now the price is higher at P1✓✓
• Due to the price increase of sugar ,people buy less sugar.The quantity
demanded has decreased from Q to Q1✓✓
P a g e 9 | 48
• When the price of one product increases, the demand for the
complement product will decrease and ceteris paribus✓✓
ADDITIONAL PART
P a g e 10 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in detail the supply relationships with the aid of graphs.
(26 marks)
• Why is it important for the product market to consider what is
happening in the factor market? (10 marks)
INTRODUCTION
Supply for a good or service is the quantity that suppliers are able and willing to provide at
as specific price and ata specific time✓✓
Main body
• The law of suppply sayss that the quantity supplied will increase when prices
are higher,if everything remian the same✓✓
• Sellers want to sell more whne the price of a product is higher because they
will make more profit✓✓
• This positive relationships between price and supply causes the positive
gradient of the supply curve✓✓
• The supply curve is aline that upwards from left to right✓✓
Substitutes
• The economic problem is that,there are scarece resources available to satisfy
unlimited needs and wants✓✓
• Producers have to choose what,how and for whom they produce,they base
their decisions on where they can achieve the highest profits✓✓
• When producers use a resource to produce one product,the resource will not
be available to produce another✓✓
• For example when producers use wood to manufacture paper,they cannot
use the same wood to manufacture furniture.paper and furniture compete for
the same resource.When the price of paper increases,the supply for the
substitute,furniture will decrease✓
P a g e 11 | 48
• An increase in the price of paper due to an increase in demand✓✓
• The demand curve D1D1 has shifted to the right to form D1D1✓✓
• The original price os paper was P1 and now the price is much higher at P2✓✓
Complements
P a g e 12 | 48
• During the production of one product,it sometimes happens that another
product is produced✓✓
• E.g when you slaughter a cow for meat,its hide becomes available for leather
products✓✓
• Complement products are produced jointly because the production of one
leads to the production of the other✓✓
• When the price one product increases,the supply will increase for that product
as well as for its complement product ✓✓
• E,g when the price of meat increases,the supply of leather products will
increase. ✓
The price of meat
P a g e 13 | 48
• Above graph shows the supply for the complement good,leather products✓✓
• The price of increase of meat will cause an increase in the supply of leather
products✓✓
• This is why the supply cuve S1S1 increases to form new supply curve S2S2✓✓
• The increased supply of complement good,leather products is the reason for the
price of leather products decreasing from P1 to P2 and the quantity supplied
increasing from Q to Q1✓✓
• When the price of one product increases,the supply for the complement product will
increase✓✓
• Each price change will have a domino effect through the market,influencing the
substitute and complement products. ✓✓
ADDITIONAL PART
P a g e 14 | 48
•The factor market is a market where factors of production are bought and
sold. ✓✓
• The product market is a market where goods and services are bought and
sold.
• The product market depends on the factor market for the availability of
factors of production. ✓✓
• When the supply of one factor of production changes, it will affect both the
factor market and the product market ✓✓
• A change in supply of skin hide would affect the hide market negatively
because there would be a decrease in the supply of hide. ✓✓
• That would also affect shoe manufacturing and there would be fewer shoes
and bags available in the product market for shoes and bags ✓✓
• When the demand for shoes in the product market increases, the demand for
factors of production in the factor market will also increase. ✓✓ (10)
CONCLUSION
It is important that product and factor markets work closely with one another and
understand each other, because they are interdependent; one cannot exist without
the other. ✓✓
(Accept any correct relevant conclusion.) [40]
P a g e 15 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in deatil the characteristics of perfect markets and monopoly
(26 marks)
• Why would a perfect competitor be forced to shut-down the business at
a certain point? (10 marks)
P a g e 16 | 48
ADDITIONAL PART
P a g e 17 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in detail the characteristics of a monopoly. (26 marks)
• How does a monopolistic competitive firm survive competition in the
market? (10 marks)
INTRODUCTION
Monopoly exists when there is only one seller of a product, with no close substitutes
and entry into the market is completely blocked. ✓✓
(Accept any other relevant correct response.) (Maks.2)
MAIN PART
Number of producers ✓
• The monopolist is the only seller in the industry and has full control over the
supply of a product ✓✓
• It represents the total industry, with complete market power e.g. De Beers,
Eskom ✓✓
• This enables the monopolist to exert considerable influence over the buyer
✓✓
Profit
• The monopoly makes a short-term loss and economic profits both in the short
and long run ✓✓
• It is more likely that the massive market power and high prices will ensure
that it makes supernormal profits ✓✓
Technical superiority ✓
• A monopoly has a technical advantage over potential competitors ✓✓
• Its access to resources and technical superiority makes it difficult for others
to compete ✓✓
• This can keep the monopolist in its position for some time, for example in the
computer software industry ✓✓
P a g e 18 | 48
• It controls the price by manipulating and restricting output to create a
shortage causing an increase in prices ✓✓
• Monopolies are therefore price makers because they have the power to
determine their own price ✓✓
• A monopoly can only decide at which point on the demand curve it wants to
produce ✓✓
Favourable circumstances ✓
• Sometimes entrepreneurs may enjoy favourable circumstances in a certain
geographical area ✓✓
• E.g. there may be only one supplier of milk, a hardware store or hotel in a
particular town ✓
• There may even be laws that protect the market, e.g. post offices in South
Africa ✓✓
Market information ✓
• A monopoly has full knowledge of all the current market conditions because it
is the only seller available in the market representing the industry as a whole.
✓✓
• New firms that wish to enter the market will not have the same information
available to them and this hampers their ability to enter the market ✓✓
• Monopolies withhold information from consumers as such it is difficult for them
to make informed decisions as they may not be fully aware of the needs of
consumers ✓✓
Exploitation of consumers ✓
• The monopolist may produce fewer products at a higher price compared to
businesses under perfect competition ✓✓
• E.g. De Beers, because the monopolist is the only producer of the product in
the market, there is always the possibility of consumer exploitation. ✓
• Most governments take steps to guard against such practices and new and
existing monopolies are usually well monitored ✓✓
Market entry ✓
• Entry in the market is completely blocked and it is impossible for other
businesses to enter the market ✓✓
• Some monopolies are created by law passed by the government giving one
firm exclusive right to produce a particular product ✓✓
• Government can use patents, licences and copyrights to restrict market entry
preventing undesirable or incompetent firms from entering the market ✓✓
• The barriers prevents other producers from entering the market to supply the
same type of product ✓✓
P a g e 19 | 48
• High start-up costs include capital investment and research and development
that could be difficult for other firms to afford ✓✓
Economies of scale
• The mere size of the large business gives it a cost advantage over a smaller
rival and this will make it impossible for the smaller business to compete ✓✓
CONCLUSION
There is no space for monopoly firms in a mixed economy such as in South
Africa, as this leads to consumer exploitation, unfair competition and excessively
high prices ✓✓
(Accept any other high order conclusion.) (Max. 2)
P a g e 20 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in detail the characteristics of a perfect market. (26)
• Examine the positive impact of competition on markets. (10)
INTRODUCTION
A perfect market is a hypothetical model of a market where there is no single
consumer or producer that has an impact on the market price.
Buyers and sellers have no preference where to buy or sell the product because the
products are the same. ✓✓
(Accept any other correct response.) (2)
MAIN PART
Number of buyers and sellers ✓
• The number of buyers and sellers is so large that individual market
participants are insignificant in relation to the market as a whole. ✓✓
• No individual buyer or seller has an influence on the market price in that
everyone is a price-taker. ✓✓
Perfect knowledge ✓
P a g e 21 | 48
• Buyers have complete knowledge about the prices, quality and availability of
goods and services. ✓✓
• Sellers have complete knowledge about production costs and market
opportunities. ✓✓
• If one business ventures to raise its price above the market price, buyers will
immediately become aware of it and would switch their purchases to
businesses still charging the lower market price. ✓✓
No collusion ✓
• Collusion does not occur in a perfect market because sellers act
independently of the others. ✓✓
Unregulated market ✓
• Buyers and sellers are not influenced by government intervention. ✓✓
P a g e 22 | 48
• Competition results in markets being innovative because innovation is crucial
to success. Innovation leads to new products and new production
technologies being developed. ✓✓
• Competition allows new firms to enter into the market usually dominated by
few firms. ✓✓
• Competition forces decisions to be based on market factors such as demand,
costs, technologies rather than incomplete information. ✓✓
P a g e 23 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Examine, with the aid of THREE separate graphs, the following short-run
equilibrium positions in a perfect market:
- Economic profit (10 marks)
- Economic loss (8 marks)
- Normal profit (8 marks)
(26 marks)
• Why would a perfect competitor be forced to shut-down the business at
a certain point? (10 marks) [40]
INTRODUCTION
There are several profit or loss possibilities for a perfect competition in the short
run. ✓✓
(Accept other correct and relevant introduction) (2)
Economic profit
(10)
P a g e 24 | 48
Normal profit
• Economic loss takes place when total costs are greater than total revenue
(TC > TR)/When average revenue is lower than average cost the firm
makes an economic loss (AR < AC)
• Economic loss is a signal to exit/leave the market.
• Point E3 represent loss minimization point where MR = MC at quantity of
Q3 and market price of P3.
(Accept other correct relevant response) Max.4
P a g e 25 | 48
Max. 4 marks
(8)
• A perfect competitor will shut down if it cannot meet its average or total
variable costs.
• When AR < AVC or P < AVC the business will be forced to shut down.
• The shut-down point is the point where MC intersects with AVC at its lowest
point
• A firm will sell goods if the price is above the shutdown price level.
• Below the shut-down point, a firm will not be able to supply and sell its
products.
• Producing a lower output would only add to the financial losses, so a
complete shutdown is required.
• If a firm decreased production, it would still acquire variable costs not covered
by revenue as well as fixed costs (costs inevitably incurred).
• By stopping production, the firm only loses the fixed costs.
(Accept other correct relevant response) (10)
P a g e 26 | 48
CONCLUSION
Whether a business makes a profit or loss depends on the location of the average
cost curve (AC) in relation to the market price when the business is in
equilibrium.
(Accept the correct relevant conclusion of a higher cognitive level).
P a g e 27 | 48
• The monopolist will produce at the output (Q[10]) where MR=MC, because
it can maximise profit at this level √√
• Point a represents the average revenue at selling price (P[10]) while point
b represents the average cost at the cost price (C[6]) √√
• When the average revenue is more than the average cost, it results in an
economic profit for the business / When the TR is more than TC it will
result in an economic profit for the business √√
• The monopoly makes economic profit when AC curve is below market
price (AR√√
• The monopoly blocks new entries so that competing businesses cannot
reduce short run economic profit
• Total income = Price x Quantity = OP(10) x OQ(10) = OPaQ
(100) √√
Total cost = Cost x Quantity = Oc(6) x OQ(10) = OCbQ (60)
Economics profit = Income – Cost = 100 – 60 = CPab (40)
√√ (Max 10)
P a g e 28 | 48
• The monopoly suffers an economic loss in the short run when the AC
curve is above the market price (g) √√
• Total income = Price x Quantity
= OP(7) x OQ(5)
= OPgQ (35)
Total cost = Cost x Quantity
= OC(10) x OQ(5) = OCfQ (50) √√
Economic loss =
(PCfg)15√√
ADDITIONAL PART
Natural monopolies' performances are not always in line with the long-run equilibrium
position of a monopoly because:
• compared to a typical monopoly where economic profit always prevails over
the long run, natural monopolies do not enjoy the benefits experienced by other
monopolies
• natural monopolies require high development cost which prevent others from
entering the market √√
• natural monopolies supply goods and services to the nation as a whole and
therefore it is difficult to set very high prices √√
• Eskom is subjected to the National Energy Regulator in South Africa (NERSA)
that determines the selling price of electricity in South Africa √√
• a natural monopoly has experienced high maintenance cost compared to
artificial monopolies, that compromises profits √√
• natural monopolies cannot manipulate its quantities to increase prices √√
• revenue seems to be less than cost due to corruption, non-payment by a large
number of electricity users √√
• under normal circumstances, a monopoly will shut down if average cost
exceeds average revenue in the long run, but natural monopolies like SAA are
often bailed out by the government due to its strategic position in the country
√√
P a g e 29 | 48
• the internal (private cost) structure of natural monopolies have increased, but
the private benefits (revenue of sales) stagnated due to poor maintenance of
infrastructure √√
(Accept any other correct relevant response)
CONCLUSION
The monopoly can continue to earn economic profit for as long as the demand for its
product continues and its production costs stay the same √√
(Accept any other higher order conclusion)
P a g e 30 | 48
TOPIC 7 : PRICE ELASTICITY
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in detail the price elasticity of demand without the aid of
graphs. (26 marks)
• Why are relative prices important in the economy? (10 marks)
Introduction
The price elasticity of demand can be defined as the percentage change in quantity
demanded if the price of a product changes or price elasticity is a measure of how
responsive demand is to a change in price✓✓
Body
Unitary elasticity ✓
• Unitary elasticity occurs when a specific change in price causes the same
change in quantity demanded. ✓✓
• . For example, when price increases by 20%, the quantity demanded will
decrease by 20% ✓✓
• Price elasticity of demand is equal to one (PED = 1) ✓✓
• When producers face a unit elastic demand curve there is no reason for them
to change the price of their product. ✓✓
• Their sales income will remain constant as the quantity will decrease by
exactly the same percentage as the increase in the price of the product. ✓✓
P a g e 31 | 48
• It implies that a change in price will cause no change in the quantity that
consumers demand. ✓✓
• The demand curve will be a vertical line, parallel to the price axis. The graph
shows that consumers plan to buy a fixed quantity of the product at a specific
price. ✓✓
• Producers can increase their income by increasing the price of their product
as the quantity demanded will not change✓✓
• Relative elastic demand occurs when a change in price will cause a greater
percentage in quantity demanded. ✓✓
• The smallest change in price will cause a large change in quantity demanded.
• This happens to products which have close substitutes. ✓✓
• A price increase will cause most consumers not to buy the original product,
but rather buy the substitute e.g. hot dogs and hamburgers. ✓✓
• The price elasticity will be greater than one (PED > 1) . ✓✓
• Producers will be encouraged to decrease the prices of their products as the
decrease in the price will lead to a larger than proportionate increase in the
quantity demanded of the product. ✓✓
• A relatively elastic demand curve can be illustrated by a relatively flat
demand curve. ✓✓
P a g e 32 | 48
ADDITIONAL PART
P a g e 33 | 48
QUESTION 5 MICROECONOMICS 40 MARKS 40 MINUTES
• Discuss in detail the price elasticity of demand (PED) with the aid of
graphs (26 marks)
• What reasons would you give for the reaction of consumers to price
changes? (10 marks)
INTRODUCTION
The price elasticity of demand can be defined as the percentage change in quantity
demanded if the price of a product changes or price elasticity is a measure of how
responsive demand is to a change in price. ✓✓
BODY: MAIN PART
unitary elasticity.
• Unitary elasticity occurs when a specific change in price causes the same change in
quantity demanded. ✓✓
• For example, when price increases by 20%, the quantity demanded will decrease by
20%. Price elasticity of demand is equal to one (PED = 1). ✓✓
• When producers face a unit elastic demand curve there is no reason for them to
change the price of their product. ✓✓
• Their sales income will remain constant as the quantity will decrease by exactly the
same percentage as the increase in the price of the product. ✓✓
P a g e 34 | 48
• Relative inelastic demand occurs when a change in price will cause a smaller
percentage change in quantity demanded. ✓✓
• Basic, necessary foodstuffs that have no close substitutes, such as maize meal are
examples of a product that tends to be inelastic. ✓✓
• Other examples include goods and services which requires a small portion of the
consumer’s income such as matches, salt etc. and habit-forming products such as
cigarettes and alcohol. Price elasticity of demand will be less than one (PED <
1). ✓✓
• A relatively inelastic demand encourages producers to increase the price of their
products as they will be able to increase their sales income. ✓✓
• A relative inelastic demand curve can be represented by a steep curve. ✓✓
P a g e 35 | 48
• The price elasticity of demand in this situation is zero (PED = 0). ✓✓
• It implies that a change in price will cause no change in the quantity that consumers
demand. ✓✓
• The demannd curve will be a vertical line, parallel to the price axis. ✓✓
• The graph shows that consumers plan to buy a fixed quantity of the product at a
specific price. ✓✓
• Producers can increase their income by increasing the price of their product as the
quantity demanded will not change. ✓✓
• Relative elastic demand occurs when a change in price will cause a greater
percentage in quantity demanded. ✓✓
• The smallest change in price will cause a large change in quantity demanded. This
happens to products which have close substitutes. ✓✓
• A price increase will cause most consumers not to buy the original product, but
rather buy the substitute e.g. hot dogs and hamburgers. ✓✓
• The price elasticity will be greater than one (PED > 1). ✓✓
• Producers will be encouraged to decrease the prices of their products as the
decrease in the price will lead to a larger than proportionate increase in the quantity
demanded of the product. ✓✓
• A relatively elastic demand curve can be illustrated by a relatively flat demand
curve. ✓✓
P a g e 36 | 48
• The smallest change in price will cause an infinitely large change in quantity
demanded. ✓✓
• The quantity demanded will drop to zero. PED = ∞. ✓✓
• A perfectly elastic demand curve can be shown with a horizontal straight line. ✓✓
• The curve illustrates that consumers are willing to buy any quantity of a product at a
certain price level. ✓✓
• However, if the price increases only fractionally, there will be no demand for the
product. ✓✓
ADDITIONAL PART
P a g e 38 | 48
TOPIC 11 : GLOBALISATION
QUESTION 6: CONTEMPORARY ECONOMIC ISSUES 40 MARKS 40 MINUTES
• Examine in detail the causes of globalisation.
• Evaluate the negative impact of globalisation on the environment.
INTRODUCTION
Globalisation is the process of interaction among the countries of the world to bring
their economies and societies together to develop the global economy. ✓✓
(Accept any other relevant correct response.)(2)
BODY: MAIN PART
Development of technology ✓
• Globalisation has been made possible, in part by technological innovation.
Over the past two decades, improvement happened in computer technology
and the application of computers. This application of computers, utilising all
their abilities, is known as information technology. ✓✓
Trade liberalisation✓
Capital liberalization
Multinational enterprises
P a g e 40 | 48
• When they produce goods/services in another country, they do not have to
export to that country, so they save in transportation costs. ✓✓
• They facilitate FDI as well as the migration of specialised labour when it is not
available in the foreign market. ✓✓
• They also play a major role in distributing and implementing new
technologies. ✓✓
• MNEs are companies that deliver products and services in at least two
countries. ✓✓
• They produce products in several countries where the costs of production is
the lowest and then distribute the products globally. ✓✓
• MNEs expose countries to international products which promotes
globalisation through international trade. ✓✓
Standardisation
• Refers to making rules the same all over the world, making it easier for
countries and businesses to trade and invest internationally. ✓✓
• Those who are subjected to the rules behave in a similar manner which
promotes globalisation. ✓✓
• Globalisation was promoted by a number of facilitating rules, procedures and
norms that were laid down by international institutions. ✓✓
• Examples of such rules include, trade relations, investments, health matters,
labour and environment. ✓✓
P a g e 41 | 48
• this is a form of trade integration in which a number of countries remove all
trade barriers (tariffs, quotas, levies) among themselves on goods and
services traded. ✓✓
• Free trade zones frequently entice global corporations to set up shop by
providing them with generous tax breaks. ✓✓
• The resulting lower costs of manufacturing more than compensate for the
tariffs that will ultimately have to be paid when the goods reach their final
destination. ✓✓
• They can open new markets, increase gross domestic product (GDP), and
invite new investments. ✓✓
• FTAs can open up a country to degradation of natural resources, loss of
traditional livelihoods, and local employment issues✓✓
The AfCFTA is the continent’s most ambitious integration initiative. The main
objectives of the AfCFTA are:
• create a single continental market for goods and services, with free
movement of businesspersons and investments✓✓
• expand intra-Africa trade across the regional economic communities and the
continent in general✓✓
• enhance competitiveness and support economic transformation.
✓✓ (Accept any other relevant correct response.)
ADDITIONAL PART
SET YOUR OWN ADDITIONAL PART
CONCLUSION
(Accept any correct relevant response)
P a g e 42 | 48
QUESTION 6 CONTEMPORARY ECONOMIC ISSUES 40 MARKS 40 MINUTES
• Discuss consequences of globalisation
• How can charging the use of the environment and emission charges ensure
environmental sustainability?
INTRODUCTION
BODY
Economic growth
• Since the 1980’s the world saw a tremendous increase in globalisation which
led to a decade of increased wealth✓✓
• The world’s total economy grew, benefiting from new technology, and the
liberalisation and growth of trade. ✓✓
• Globalisation had a positive impact on the South African economy
• It is estimated that approximately 98% of the increase in world GDP can be
linked to globalisation. ✓✓
Environmental degeneration
• There is a growing concern that globalisation is damaging the planet✓✓
• The state of our environment is continuously declining and various renewable
resources such as fresh water, forests, plant, and animal species are being
exhausted. ✓✓
• The consumption patterns of richer countries are the main source of
environmental destruction and leads to global warming✓✓
Cultural change
• The availability of some consumer goods, such as soft drinks, hamburgers
and music are visible signs of globalisation✓✓
• Producers such as Nike and Sony promote a lifestyle that flow from rich
countries to poor countries✓✓
• The dominance of the English language is another example of globalisation
• This is leading to one global culture✓✓ max 26
(Accept any correct relevant response)
P a g e 44 | 48
ADDITIONAL PART
CONCLUSION
The dynamic structure of the global economy because of globalisation has
influenced the macroeconomic policies in the world towards the realisation of even
greater globalisation benefits ✓✓
(Accept any correct relevant response)
P a g e 45 | 48
Topic 12: ENVIRINMENTAL DETERIORATION
QUESTION 6: CONTEMPORARY ECONOMIC ISSUES 40 MARKS 40 MINUTES
• Examine in detail the state of the environment. (26 marks)
Examine in detail problems threating the environment
• Argue in favour of protecting the environment. (10 marks)
INTRODUCTION
BODY
Human claims on the environment are approximately 50% more than what the
natural environment can provide continuously on a long-term basis. These claims
originate because of 2 reasons:
• Excessive consumption. Caloric food intake by people in developed
countries is 35% higher than the amount that nature can provide on a
sustainable basis. ✓✓
• Increasing population numbers. The world’s population grows mostly as a
result of the high fertility rates in developing countries ✓✓
The excessive claims of humans n nature impact in three areas, namely: non-
renewable resources, renewable resources and economic waste.
Non-renewable resources✓
• From past evidence it is possible to extrapolate what may happen in future.
✓✓
P a g e 46 | 48
• The effects of these losses on other animal and plants are not known yet, but
for our purposes the loss of species represents a loss of economic potential
and is thus not in the interest of development ✓✓
Soil erosion
• There is no known way that we can replace our soil. ✓✓
• In South Africa annual soil losses are estimated at 300-400 million tons,
nearly three tons per hectare. ✓✓
• If the world’s soil resources are being so rapidly depleted, clearly the ability of
the world to feed itself is also being affected. ✓✓
Renewable resources✓
• Renewable resources are natural resources such as land for natural habitat
and wildlife areas, land for various agricultural uses, fauna and flora, crop
products, farm animals, game, sea and fresh water fish and underground
water. ✓✓
• These are resources which over time and with good management can be
replenished ✓✓
• Nevertheless most so-called renewable resources may become exhausted if
they are not managed in a sustainable manner. ✓✓
Economic waste
• Waste occurs in the economy because of simple natural law: the total mass of
inputs to a transformation process is equal to the total mass of outputs.
• If inputs do not emerge as desired products, they must therefore appear as
unwanted by-products or waste ✓✓
Solid waste
• In sold form, waste presents itself as chemical liquids and concrete things, for
example used tyres and plastic bags. ✓✓
• These are synthetic things that do not occur in nature, and nature does not
have a way to decompose them. ✓✓
Gas waste
• Gas waste refers to the pollution of the atmosphere and has two major forms,
namely chlorofluorocarbons and carbon dioxide (CO2) ✓✓
• The result is than the rate of emissions in recent decades has been far
greater than the rate of absorption. ✓✓
P a g e 47 | 48
ADDITIONAL PART
END
P a g e 48 | 48