Economics Grade 12 Questions and AnswersThe Consequences of Market Failures Economics Grade 12 Questions and Answers

The Consequences of Market Failures Economics Grade 12 Questions and Answers

The Consequences of Market Failures Economics Grade 12 Questions and Answers. Monopolists restrict output and charge higher prices compared to competitive markets. The reduced output and the higher price lead to a reduction in societal welfare, which is the deadweight loss

THE REASONS AND CONSEQUENCES OF MARKET FAILURES QUESTIONS AND ANSWERS GRADE 12

Activity 1
Study Figure 8.8 and answer the questions that follow.
8.8

  1. What economic technique for enumerating and evaluating is depicted in the illustration? (2)
  2. Give TWO recent examples of potential ‘operations’ in South Africa that will fit into the illustration. (2)
  3. List ONE social benefit of each of the above projects. (4)
    [8]
Answers to activity 1

  1. Cost benefit analysis  (2)
  2. Gautrain Coega (2)
    Any other relevant fact.
  3. Gautrain: Better infrastructure 33More effective transport
    Coega: Job creation/increased standard of living  Any other relevant fact. (any 2 × 2) (4)
    [8]


Activity 2
Distinguish between merit and demerit goods. [8]

Answer to activity 2

  • Taxation, subsidies and legislation are used to control merit and
    demerit goods.
  • Merit goods: higher consumption of goods is regarded as good for
    society government makes use of subsidies (distribute
    condoms).
  • Demerit goods: government imposes taxes to discourage
    consumption  (cigarettes).
    [8]

Activity 3
Discuss the features of collective goods. [8]

Answer to activity 3

  • Non-rivalry: Consumption by one person does not reduce
    consumption by another individual e.g. a lighthouse
  • Non-excludability: Consumption can’t be confined to those
    who pay for it (free riders can use it) e.g. radio and television
    [8]

Activity 4
Discuss the distribution of wealth and income as a consequence of market failure. [8]

Answer to activity 4

  • Through the national budget and taxation
  • Change the distribution of income by: Subsidies, transferring
    payments to poor households, providing goods and services free
    of charge, implementing job creation programmes
  • Regulatory measures: Land reform, labour legislation,
    preferential access to government procurement contracts, black
    economic empowerment policies
    [8] 


Activity 5
Study the following illustration and answer the questions that follow:
act5

  1. Identify the negative externality depicted in the illustration. (2)
  2. List TWO measures that can be applied by government to reduce
    this externality. (2)
  3. What is the liability of the factory in this regard? (2)
  4. What effect will this have on consumer prices? (2)
    [8]
Answers to activity 5

  1. Pollution
  2. Legal actions and taxes  (any 1)
  3. To reduce the pollution
  4. Consumer prices will increase

Related:

© www.myexampapers.com. All rights reserved.