REMOTE LEARNING ACTIVITY BOOKLET

(RELAB)

SUBJECT: ECONOMICS

GRADE: 11

TERM TWO

1 ECON Grd 11 T2
 FORWARD

ReLAB (Remote Learning Activity Booklets) contains the Informal activities that are
administered to learners when they complete a section of the content. This is to ensure that
learners are assessed as they learn (Assessment for Learning). Learners that are home on
rotation are given homework to complete on the day, to ensure that they remain engaged in the
content. It is important for learners to work at Economics continuously, to ensure that they grasp
all the content that was taught by the teacher when they were physically at school.
The GDE has long been advocating for the TADR approach; these resources are simply there
to support the Assessment and Diagnosis and Remediation of work that has been taught by
teachers in class.

In the cementing of the work that has been covered in the class, it gives learners an opportunity
to be self-directed. As an informal activity, learners can mark themselves with the guidance of
the educator, as she/ he has the marking guideline. Learners can do the remediation as they
mark, to ensure that correct answers are there for study and revision purposes.

With this approach the coverage of the curriculum can move at the expected pace, as learners
will cover the written work on their own at home. If teachers have access to groups with learners,
they can communicate with learners via these groups to ascertain progress and determine if
there are any challenges experienced by learners on the specific content. Learners may also
report to the teacher on their return to school if there were any challenges experienced while
attempting the activities.

The correct type of activities as well as the improved conceptual understanding of the learners
will ensure enhanced understanding and ultimately better results for grade 11 Economics
Learners.

2 ECON Grd 11 T2
 ECONOMICS INFORMAL ACTIVITIES TERM 2

TABLE OF CONTENTS
TOPIC MICROECONOMICS
1 Relationship between markets
2 Effects of cost and revenue
3 Price elasticity

3 ECON Grd 11 T2
QUESTION 1 MULTIPLE CHOICE
1.1.1 One of the following phrases depicts demand relationships between
substitutes(ceteris paribus)
A. Decrease in prices of a product and an increase in demand of the substitute
product
B. Increase in the price of a product and an increase in demand of the
substitute product
C. Decrease in the price of a product and a decrease in the demand of the
product
D. Increase in price of a product and no increase in demand of the substitute
product

1.1.2 A market that exists when buyers and sellers meet to negotiate the exchange of
prohibited goods, is referred to as a/the … market.
A. Goods
B. Factor
C. Black
D. Capital

1.1.3 Profit maximisation point is where ..

A. MC = AR
B. MC = MR
C. AC = MR
D. AC = AR

1.1.4 Monopolies produce goods that are … in nature.

A. homogenous
B. differentiated
C. good
D. unique
1.1.5 The oligopolist is a …
A. Price-searcher
B. Price-taker
C. Price –leader
D. Price- giver

1.1.6 The … price is the price of one good expressed in terms of another.
A. nominal
B. index
C. percentage
D. relative

4 ECON Grd 11 T2
1.1.7 As a rule, the firm should shut down when …
A. MC = AVC
B. MC = ATC
C. MR = MC
D. AR = AC

1.1.8 The AR curve is always above the MR curve because …

A. AR is more inelastic than MR
B. MR is more elastic than AR
C. AR is more elastic than MR
D. MR is more inelastic than AR

1.1.9 The … curves resemble the demand curve.

A. MC and AC
B. AR and AC
C. MC and MR
D. MR and AR

1.1.10 Which of the following is not a characteristic of a perfect market?

A. Few participants
B. Participants fully knowledgeable about prices
C. No barriers to entry and exit
D. Participants are price takers

1.1.11 Collusion is a common practice in …

A. Perfect markets
B. Monopolistic markets
C. Monopoly
D. Oligopoly

5 ECON Grd 11 T2
1.1.12 The graph below indicates…

A. profit of a perfect market.

B. loss of a perfect market.
C. profit of a monopoly.
D. loss of a monopoly.

1.1.13 If the bank charges of FNB decreases, the demand for ABSA products will …
A. Increase
B. Decrease
C. Stay the same
D. Stop

1.1.14 The minimum earnings that will prevent the entrepreneur from leaving the
business.
A. Economic profit
B. Economic loss
C. Normal profit
D. Normal loss

1.1.15 Price wars are characteristics of this type of market.

A. Monopolistic competition
B. Monopoly
C. Perfect
D. Oligopoly

6 ECON Grd 11 T2
1.1.16 Costs that change as production changes are called …
A. Fixed costs
B. Variable costs
C. Average costs
D. Total costs

1.1.17 The sacrifice that must be made of one item in favour of another, because of
scarcity, is known as …
A. Opportunity costs
B. Scarcity cost
C. Cost of living
D. Standard cost

1.1.18 Satisfaction derived from consuming a product is known as … utility.

A. Average
B. Marginal
C. Total
D. Average variable price

1.1.19 A stage in which the long-run average cost curve (LRAC), where production
neither increase or decreases is known as …
A. Economies of scale
B. Diseconomies of scale
C. No returns to scale
D. Constant returns to scale

1.1.20 The effect of brand loyalty is to make the demand for the product more price …
A. Elastic
B. Inelastic
C. Unitary elastic
D. Perfectly elastic

1.1.21 Change in quantity demanded due to changes in income is referred to as …

elasticity.
A. Income
B. Supply
C. Supply and demand
D. Cross

1.1.22 A change in quantity demanded of product A, due to a change a change in

price of product B is referred to as … elasticity
A. Income
B. Cross
C. Price
D. Demand

7 ECON Grd 11 T2
1.1.23 Elasticity of income is … if Ey = 0.
A. Relatively inelastic
B. Relatively elastic
C. Completely inelastic
D. Completely elastic

1.1.24 … goods are goods for which demand increases as consumer income rises.
A. Inferior
B. luxury
C. normal
D. elastic

1.1.25 When the percentage change in quantity supplied is greater than the
percentage change in price it refers to …
A. Price elastic supply
B. Price inelastic supply
C. Unitary elasticity of supply
D. Zero elasticity of supply

1.1.26 The total cost curves always starts at …

A. 0.
B. The same place total fixed cost starts
C. The same place total variable cost starts
D. The same place total revenue starts

1.1.27 Profit maximisation is where the vertical distance between … and TC is the
biggest.
A. TFC
B. TVC
C. MC
D. TR

1.1.28 Additional cost paid by the firm for every additional unit produced.
A. Marginal profit
B. Marginal revenue
C. Average cost
D. Marginal cost

1.1.29 An ice cream cost R10 and a cold drink costs R30. If a consumer chooses to
buy the cold drink, what will his/her opportunity cost be?
A. 2 ice creams
B. 1 ice cream
C. 2 cold – drinks
D. 1 cold drink and 1 ice cream

8 ECON Grd 11 T2
1.1.30 The more a variable input is used, while all the other inputs are being kept
constant, then each additional unit of the variable input will eventually produce
less additional output. This is called…
A. The law of demand
B. The law of diminishing returns
C. Diminishing marginal utility
D. Marginal cost

1.2 MATCHING COLUMNS

COLUMN A COLUMN B
1.2.1 Base year A. The market price is determined by the market
forces.
1.2.2 Markets
B. Legal rights which protect the inventor from
1.2.3 Complementary competition.
goods
C. Ensure optimal allocation of scarce
1.2.4 Price taker Resources

1.2 5 Economies of scale D. The cross-price elasticity of demand is positive.

1.2.6 Duopoly E. Price of one good compared to another good to

another that indicates opportunity cost.
1.2.7 Total costs
F. Change in price has no effect on supply
1.2.8 Patents
G. Production costs decrease as outputs increase
1.2.9 Monopolistic
competition H. The point where the firm breaks even.

1.2.10 Deadweight loss I. Controls the price of the product and tends to
set the price for its own benefit.
1.2.11 Perfectly inelastic
supply J. A combination of perfect and imperfect
competition.
1.2.12 Cartel
K. The market makes economic loss in the short
1.2.13 Oligopoly run.

1.2.14 Marginal revenue L. Natural resources are not evenly distributed

1.2.15 Substitutes M. TFC + TVC

1.2.16 Normal profit N. Legal rights which protect the inventor from
competition.
1.2.17 Disutility

9 ECON Grd 11 T2
 COLUMN A COLUMN B
O. The year in which an index starts.
1.2.18 Ped is greater than
1 P. The demand curve is kinked.

1.2.19 Inferior goods Q. Quantity produced is below socially efficient

level
1.2.20 Relative price
R. They are jointly demanded.

S. Price elastic demand

T. A feeling of uselessness, a lack of utility.

U. Market structure dominated by two firms.

V. The change in the firm’s total revenue as a

result of selling an extra unit of the output.

W. A good that has a negative income elasticity of

demand

X. An association of manufacturers or suppliers

formed to maintain high prices and restrict
competition.

( 20 x 1 ) (20)

1.3 CONCEPTS
1.3.1 The demand relationship between goods that are used in conjunction with each
other.
1.3.2 The price of a good or service, in terms of another good or service
1.3.3 Products that are not identical to other similar ones and have slight differences.
1.3.4 The increase in total cost when one additional unit of output is produced.
1.3.5 The responsiveness of the quantity supplied of a product to a change in its price.
1.3.6 The opportunity cost of the use of all self-owned resources in the production of
goods and services.
1.3.7 When firms cooperate to limit competition in the market by fixing the price,
limiting supply or diving the market.
1.3.8 It states the inverse relationship between quantity demanded and prices.
1.3.9 The satisfaction gained from the consumption of a given quantity of goods.

10 ECON Grd 11 T2
1.3.10 A market structure in which one business has market power.
1.3.11 Burger King is an example of this market structure.
1.3.12 A market structure is very easy to enter and the products are homogenous.
1.3.13 The quantity where MR is equal to MC.
1.3.14 Cement is an example of a product sold in the market structure
1.3.15 The cost that changes according to the level of production
1.3.16 The sum of fixed costs and variable costs.
1.3.17 The change in demand is equal to the change in price.
1.3.18 A market dominated by two firms
1.3.19 A market structure in which all production of a good or service is done by
a single firm
1.3.20 Entry of new firms into the market is completely blocked
1.3.21 A period during which all factors of production are variable.
1.3.22 Satisfaction derived from consuming an additional unit of a good or service.
1.3.23 A period during which at least one factor of production is fixed.
1.3.24 Goods that have a negative income elasticity of demand.
1.3.25 Profit in excess of normal profit.

QUESTION 2
2.1 List any TWO methods of non-price competition
2.2 Name any TWO monopoly industries in South Africa
2.3 List any TWO characteristics of perfect markets.
2.4 Give any TWO examples of monopolistic markets.
2.5 Name TWO barriers that prevent new businesses from entering a
monopoly market.
2.6 Name any TWO features of utility.
2.7 Give any TWO examples of fixed costs in the short-run.
2.8 Give TWO examples of normal goods.
2.9 Name any TWO Oligopoly industries in South Africa.
2.10 Give TWO factors influencing the price elasticity of supply
2.11 Name any TWO types of supply elasticity.

11 ECON Grd 11 T2
2.12 List any TWO factors that influence the elasticity of demand.
2.13 Give TWO derivatives calculated from Total Revenue
2.14 Name any TWO averages used to determine economic profit. (2x1) (2) each

QUESTION 3
3.1 Why would a change in the price of a good influence consumers’ demand for that
specific good? (1x2) (2)
3.2 How do imperfect market structures occur? (1x2) (2)
3.3 What effect will the increase of absolute prices have on the consumers’ spending
power? (1x2) (2)
3.4 Why will consumers benefit more under perfect competition than under
a monopoly? (1x2) (2)
3.5 What price elasticity would a supply curve have if it intercepts the horizontal
(quantity) axis? (1x 2) (2)
3.6 How would a firm benefit from considering the price elasticity of demand
before changing prices? (1x2) (2)
3.7 Why does the AR curve always lie above the MR curve? (1x 2)(2)

QUESTION 4
DATA RESPONSE
4.1 Study the table below and answer the questions that follow.
Price Quantity TR TC Profit
10 0 0 25 25
10 5 A 30 20
10 10 100 35 65
10 15 150 40 B
10 20 200 45 155

4.1.1 Identify the market represented by the table. (1)

4.1.2 What is represented by the -25 in the profit column above? (1)
4.1.3 Determine the values of A and B. (2)
4.1.4 Why is there a value for TC when production (quantity) is zero? (2)
4.1.5 Present TR and TC on the same set of axes. (4)

12 ECON Grd 11 T2
4.2 Study the cartoon below and answer the questions that follow.

Source: businessbookmail.com
4.2.1 Which market structure is illustrated in the cartoon above? (1)
4.2.3 What is the nature of the product in the cartoon? (1)
4.2.3 Briefly describe the concept collusion. (2)
4.2.5 Why is it more beneficial for firms to collude instead of engaging in competition?
(2)
4.2.5 Evaluate the impact price fixing has on the poor? (4)

4.3 Study the graph below and answer the questions that follow.

13 ECON Grd 11 T2
4.3.1 Identify the profit maximisation quantity in the graph above. (1)
4.3.2 Which curve is also known as the supply curve? (1)
4.3.3 Define the term marginal revenue. (2)
4.3.4 Why is the MC curve of a monopoly not intersecting the ATC at the minimum
point? (2)
4.3.5 Determine whether the firm resembled in the above graph is making a profit
or a loss. (4)

14 ECON Grd 11 T2
4.4 Study the table below and answer the questions that follow
Diminishing Marginal Utility
Muffins Total Utility Marginal Utility
1 10 12
2 13 3
3 14 1
4 12 -2
5 9 -3

4.4.1 According to the table above, how many muffins should this person consume?
(1)
4.4.2 What is the formula to calculate marginal utility? (1)
4.4.3 Explain the concept diminishing marginal utility. (2)
4.4.4 Differentiate between economic profit and normal profit. (2)
4.4.5 Why is it important for an entrepreneur to cover implicit and explicit costs? (4)

4.5.Study the graph below and answer the questions that follow

4.5.1 What does the abbreviation TVC stand for? (1)

4.5.2 Why is the FC curve horizontal? (1)

15 ECON Grd 11 T2
4.5.3 Explain the term long run. (2)
4.5.4 Given that TVC= R235. How much are the total costs? (2)
4.5.5 Explain marginal cost in detail. (4)

4.6 Consider the graph below and answer the questions that follow.

4.6.1 Which market structure is represented by the graph? (1)

4.6.2 What does the shaded area represent? (1)
4.6.3 Briefly explain the concept price taker. (2)
4.6.4 Why is the demand curve of the market structure a horizontal line? (2)
4.6.5 Explain why a perfect market firm makes normal profit in the long run? (4)

4.7 Study the cartoon below and answer the questions that follow.

16 ECON Grd 11 T2
 cartoonistgroup.com

4.7.1 Give the form of elasticity illustrated in the cartoon above. (1)
4.7.2 State the relationship between the two products in the above cartoon. (1)
4.7.3 Explain the concept elasticity of demand in full. (2)
4.7.4 What is the impact of the change in price of margarine to the demand for butter?
(2)

4.7.5 Assume the two products were being sold at the same price, the percentage
change in quantity demanded for butter is 20%. Calculate the cross elasticity
of demand for the two products. Show ALL calculations (4)

QUESTION 5
5.1 Discuss the impurities in perfect markets. (8)
5.2 Distinguish between natural and artificial monopolies. (8)
5.3 Explain the following in terms of the monopoly:
• price makers
• completely blocked entry in (8)
5.4 Differentiate between accounting profit and economic profit. (8)
5.5 Distinguish between Fixed costs and Variable costs (8)
5.6 Discuss the characteristics of monopolistic competition. (8)

17 ECON Grd 11 T2
5.7 Evaluate the impact of the law of diminishing returns on the producer. (8)
5.8 Differentiate between productive efficiency and allocative efficiency as
characteristics of a perfect market (8)
5.9 Explain the relationship between product market and the factor market. (8)
5.10 What is the importance of elasticity of demand to the economy? (8)

QUESTION 6
• Discuss in detail the characteristics of an oligopoly. (26 marks)
• Explain without the use of a graph why oligopolies are reluctant to compete
based on price. (10 marks)

QUESTION 7
• Discuss in detail, the different degrees of demand elasticity. (26 marks)
(No graphs required)
• Evaluate how a monopolist like Eskom can benefit from using the price
elasticity of demand for their product. (10 marks)

QUESTION 8
• Compare the market structure of a perfect with that of a monopoly (in detail)
using the characteristics. ( No graphs required) (26 marks)
• With reference to the graphs, explain how the price formation process
takes places in the perfect market. (10 marks)

QUESTION 9
• Compare the market structure of a the oligopoly with that of a monopoly (in
detail) using the characteristics. ( No graphs required) (26 marks)
• With the aid of a graph, explain fully the graph of an oligopolist. (10 marks)

18 ECON Grd 11 T2
RELATIONSHIP BETWEEN MARKETS

Concept / Term Definition / Description

Absolute price The price the consumer pays for goods and services in rand and
cents
Compliment Two or more goods that are connected in some manner to each other
and can be used together
Complimentary Goods that are used with another good; an increase in the price of the
goods one will result in an decrease in the demand for the complementary
product
Demand The quantity bought by customers t different prices
Economic profit The enterprise earns more profit than it could earn elsewhere
employing the same factors of production
Factor market Markets where factors of production are sold to the producers in the
enterprises
Goods market Markets where the final goods are exchanged between producers and
consumers
Heterogenous Products differ
products
Homogenous The product of one producers is indistinguishable from that of another
products (products are the same)
Imperfect These are the monopolistic competitors, oligopoly and monopoly, that
markets are not part of the perfect markets
Law of demand When prices increase the quantity demanded dropped, when prices
drops the demand increase
Law of supply When prices increase, the quantity supplied rises: when prices drop,
the supply drops
Market structures Describe the different levels and forms of competition
Monopolies A monopoly exists if there is only a single seller of a product of which
there are no close substitutes
Monopolistic Is a market composed of a number of producers whose
competition
Nominal prices The price you see on goods and those that are quoted for services
Oligopolies An oligopoly is a market composed of only a small number of
dominant producers, whose pricing decisions are interdependently
Perfect market Represents the ideal level of competition
Price takers It is sellers who do not believe they can control the markets price by
varying its own production levels
Relative price The price of one good or services in terms of another, expressed as a
ratio of two prices, the price of goods compared to other goods
Substitute goods Goods that can be used instead of another product, a change in the
price of the one will result in an increase/decrease of the other
Substitutes Products that are so similar that they can be bought instead of the
original good
Supply The quantity that producers are wiling and able to sell at a certain
price and time

19 ECON Grd 11 T2
TOPIC 1: MICROECONOMICS: RELATIOSHIP BEWTEEN MARKETS

SECTION A: TYPICAL EXAM QUESTIONS

DYNAMICS OF MARKETS
QUESTION 1: Section A – Short Questions

HINT: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear
correct. The answer will NEVER be two options. Only ONE option is correct. Your
answer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions.
Choose the answer and write only the letter (A–D) next to the question
number.

1.1.1 When one decision is made, the next best alternative not selected is called …
A economic resources.
B opportunity cost.
C scarcity.
D. need

1.1.2 All other things being equal, supply curves slope upwards from left to right
because …
A. higher prices lead to higher profits.
B lower prices lead to higher output.
C lower prices lead to higher demand.
D middle prices to lower output.

1.1.3 In imperfect markets, fewer goods are produced at higher prices because
A there is constant allocation of resources.
B there is effective resource allocation
C there is ineffective resource allocation.
D there are no legal restrictions

1.1.4 Tennis balls and tennis racquets are ... products

A substitute
B heterogeneous
C homogeneous
D complimentary

20 ECON Grd 11 T2
1.1.5 What would be the economic profit if you had revenue of R10 000, explicit costs
of R6 000 and implicit costs of R2 500?
A 10 000
B 1 500
C 500
D 15 000
1.1.6 The price that is quoted for a good on the market and give signals to the buyers
is called … price.
A absolute
B relative
C real
D constant

1.1.7 If ‘A’ and ‘B’ are substitute goods, and the price of ‘B’ rises, demand for ‘A.’
A decrease
B remains the same
C remains unstable
D increases

1.1.8 The following are examples of firms in oligopoly:

A MTN, Absa, Engen
B NIKE, McDonald’s, BMW
C KCF, Samsung, Romans Pizza
D Shoprite, Checkers, Pick n Pay

1.1.9 Many firms selling heterogeneous products are referred to as …

A monopolies
B oligopolies
C monopolistic competition
D perfect competition

1.1.10 The demand curve for a monopolistic competition is ...

A horizontal.
B vertical.
C downward-sloping.
D upward-sloping.

1.1.11 The market where final goods and services that are locally produced are sold to
consumers is the ...
A money markets
B goods market
C international market
D financial market

1.1.12 Ice cream and ice cream cones are … products.

A substitute
B complimentary
C homogeneous

21 ECON Grd 11 T2
 D heterogeneous

1.1.13 Firms that determine their own prices are called price …
A takers.
B makers.
C negotiators.
D searchers.

1.1.14 Resources that may become exhausted if they are not managed in a
sustainable
manner are known as … resources.
A natural
B finite
C man-made
D renewable

1.1.15 When one country can produce a good using fewer resources than another
country, it has … advantage in the production of that good.
A absolute
B dual
C relative
D comparative cost

1.1.16 An increase in the price of one product leads to an increase in the demand for
another product, means that these two are ... goods.
A complementary
B essential
C substitute
D same

1.1.17 The dynamics of economies starts with …

A production.
B prices.
C markets
D consumption

1.1.18 The OligopoIist is a …

A price – searcher.
B price – taker.
C price – leader.
D

1.1.19 Freedom of entry is a characteristic of … markets.

A perfect
B perfect and monopolistic
C monopolistic
D imperfect market

22 ECON Grd 11 T2
1.1.20 The satisfaction that we get from consuming goods and services is known as ...
A scarcity.
B utility.
C opportunity cost.
D necessity.

1.1.21 ... price is the ratio between the price of a product and the prices of other
products.
A Market
B Absolute
C Basic
D Relative

1.1.22 Total utility can be defined as ...

A total satisfaction gained by adding up all utils.
B satisfaction gained from consuming the last unit.
C measure of the value of satisfaction.
D difference in measurements of utility.

1.1.23 Selling differentiated products is a characteristic of a/an … market.

A oligopolistic
B perfect
C monopolistic
D monopoly

1.1.24 Satisfaction derived from consuming a product is known as … utility.

A average
B marginal
C total
D average variable

1.1.25 A market that exists when buyers and sellers meet to negotiate the exchange of
prohibited goods, is referred to as a/the … market.
A goods
B factor
C black
D capital

1.2 Choose a description from COLUMN B that matches the item in COLUMN
A.
Write only the letter (A-I) next to the question number (1.2.1 –1.2.12) in the
ANSWER BOOK.

23 ECON Grd 11 T2
 COLUMN A COLUMN B
1.2.1 Relative prices A Able to influence the market price through
changing the quantity it supplies to the market.
1.2.2 Inferior goods B Barriers to enter the market.
1.2.3 Product market C Making as much profit as possible.
1.2.4 Price maker D Period long enough to change the inputs.
1.2.5 Patent E Few large sellers dominating the market.
1.2.6 Business objective F barriers protect them from competition by
other businesses.
1.2.7 Long term G goods offered for sale at a given price.
1.2.8 Supply H Legal barrier to entry.
1.2.9 Monopolies I Increase in income leads to smaller
quantities demanded of these goods.
1.2.10 Oligopoly J Facilitates the purchase and sale of services
of factors of production, which are inputs like labour,
capital, land and entrepreneurship that are used by
a firm to make a finished product.
1.2.11 License K Comparison between prices of goods.
1.2.12 Factor market L Goods and services are traded.
1.1.13 Absolute benefit M Any market that does not have all the
characteristics of a perfect market
1.1.14 Collusion N Businesses set and agree on prices
1.1.15 Duopoly O Powerful competitors try to take over each
other’s market share by progressively reducing
prices
1.1.16 Imperfect market P Appear when a country can produce more of
a product than another country using the same
amount of resources
1.1.17 Price war Q Market structure dominated by two firms

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations
will be accepted.

1.3.1 The price of a good or service, in terms of another good or service

1.3.2 Many buyers and sellers selling differentiated products.
1.3.3 A period whereby only one factor of production can be varied.
1.3.4 Minimum earnings that will prevent an entrepreneur from employing its
factors of production elsewhere.
1.3.5 The marketplace in which final goods or services are offered for purchase
by consumers, businesses, and the public sector
1.3.6 An increase in income causes a decrease in demand for this good.
1.3.7 Demand curve for an oligopoly.

24 ECON Grd 11 T2
 1.3.8 When firms do branding, advertising, product differentiation, extend
shopping hours.
1.3.9 The rivalry among sellers trying to achieve such goals as increasing
profits, market share, and sales volume by varying the elements of the
marketing mix: price, product, distribution, and promotion

1.3.10 When consumers compare the cost of products with each other to ensure
value for money.
1.3.11 A platform where the quantities and prices of production inputs
are negotiated.
1.3.12 The number of customers that one firm has access to in relation to the
other firms in the market
1.3.12 Products that are not identical to other similar ones and have slight
differences
1.3.14 A combination of perfect competition and imperfect competition
1.3.15 It states the inverse relationship between quantity demanded and prices
1.3.16 A situation where sellers enter into an agreement to limit competition and
increase financial gain.

SECTION B

QUESTION 2:

HINT: When the question requires you to “list” or “name”, you need not write a
sentence but merely one or two words. This MUST be done in bullet form. This
types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name any TWO monopoly industries in South Africa (2)

2.2 List any TWO examples of complementary goods. (2)
2.3. Give any TWO examples of monopolistic markets. (2)
2.4 List any TWO kinds of profit. (2)
2.5 Name any TWO factors that can cause a shift of the demand curve. (2)
2.6 List TWO examples of complementary goods. (2)
2.7 Name (Give/List) TWO characteristics of perfect markets. (2)
2.8 List any TWO features of utility (2)
2.9 List TWO objectives of business. (2)

QUESTION 3:
HINT: These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2
3.1 What would encourage a producer to continue increasing its production? (2)
3.2 How does an increase in demand affect the price of a good/service? (2)
3.3 Why is it important for businesses to set goals? (2)
3.4 What makes it impossible for an individual producer in perfect competition to
make an economic profit in the long run? (2)
3.5 How is non-price competition an advantage for a perfect competitor? (2)

25 ECON Grd 11 T2
3.6 Why is the demand curve for a perfect competitor horizontal? (2)
3.7 Why is it impossible for a monopoly to collude? (2)
3.8 Why is the demand curve of a monopolist sloping downwards? (2)
3.9 What is the implication of the Law of supply? (2)
3.10 How do product and factor markets relate to one another? (2)
3.11 Explain what is meant by excess demand. (2)
3.12 How would decreasing relative prices influence people’s standard of living?
(2)
3.13 Explain the role of the monopoly as a price maker (2)
3.14 Why does the average fixed-cost curve slope downwards from left to right?
(2)
3.15 How do imperfect market structures occur? (2)

DATA RESPONSE

HINT: All section B questions have TWO data interpretation questions – each total
10 marks. Section B consist of Questions 2-4 not as numbered in this document

QUESTION 4:

4.1. Study the extract below and answer the following questions:

THREE MONOPOLIES THAT SOUTH AFRICA SHOULD END

Entities that are protected by legislation morph into monopolies, resulting in limited
competition. Time and time again, these legislated monopolies bank on the taxpayer’s
rands to bail them out of the repercussions of what seems to be chronic
underperformance. Below is a list of industries that are overshadowed by state-run
monopolies that, if deregulated and privatised, will yield far greater returns to the citizens
of South Africa.

➢ Aviation
➢ Energy Supply
➢ Railways

4.1.1 Identify ONE of the three state monopolies implied in the extract (1)
4.1.2 How are monopolies protected? (1)
4.1.3 Describe the term monopoly. (2)
4.1.4 Why do you think South Africa should end the monopolies mentioned
above in the above extract? (2)
4.1.5 Explain the disadvantages of the monopolies (4)

26 ECON Grd 11 T2
 4.2 Study the graph below and answer the questions that follow.

MARKET FOR PETROL

D S1
PRICEE
E
S
E2
P1

S1
D
S

Q QUANTITY

4.2.1 What is depicted by the diagram above? (1)

4.2.2 What is the impact on the price and quantity of the shift in supply from
SS to S1S1? (1)
4.2.3 Explain the phrase inverse relationship. (2)
4.2.4 What may be the cause of a shift in supply from SS to S1S1? (2)
4.2.5 Draw the graph of the complement product (petrol) and indicate what
the reaction would be. (4)

4.3 Study the extract below and answer the questions that follow:

OLIGOPOLIES

A few large oligopolies dominate an oligopoly market, i.e. just a few handset
manufacturing companies dominate the cell network of South Africa. The products
are similar, and sold by a few companies. Moreover, the products are branded due
to extreme competition, and because there are huge long- term entry barriers, the
companies make exorbitant profits. The competing companies have an unusual
interdependence, to the point that they almost operate in unison.

[Adapted from Markitects./co.za]

27 ECON Grd 11 T2
 4.3.1 From the extract, list any ONE features of an oligopoly (1)
4.3.2 What other economic term describes the nature of the product sold by
oligopolies? (1)
4.3.3 Explain the term entry barrier (2)
4.3.4 Why do firms collude with one another? (2)
4.3.5 How does branding assist a company operating in an oligopoly
m a r k e t structure. (4)

4.4 Study the graph and answer the questions that follow

4.4.1 Which market structure is depicted above? (1)

4.4.2 What type of profit is indicated in the above graph? (1)
4.4.3 Briefly explain point ‘e’ on the graph. (2)
4.4.4 Explain the slope of the marginal cost curve. (2)
4.4.5 Why are MR and AR equal in the graph? (4)

4.5 Study the graph and answer the questions that follow

28 ECON Grd 11 T2
 4.5.1 What does the shaded area in the graph represent? (1)
4.5.2 Which point on the graph illustrates profit maximisation? (1)
4.5.3 Briefly describe the term monopoly. (2)
4.5.4 Explain entry as a feature of a monopoly. (2)
4.5.5 Use the formation from the graph, calculate the profit or loss.
Show ALL calculations. (4)

4.6 Study the scenario under and answer the questions that follow

29 ECON Grd 11 T2
 4.6.1 What should be the main focus of ACSA? (1)
4.6.2 Identify ONE of the South African Airways competitors. (1)
4.6.3 Briefly explain the term competition (2)
4.6.4 How did the introduction of competition benefit the airline? (2)
4.6.5 Would you describe the taxi industry in South Africa as a monopoly?
Explain. (4)

4.7 Study the graph and answer the questions that follow

4.7.1 Give an example of a substitute for milk? (2)

4.7.2 In your opinion, why did the demand for milk shift from D1 to D2? (4)
4.7.3 Explain how the demand for a good is affected by the prices of its related
goods. Give examples. (4)

30 ECON Grd 11 T2
4.8 Study the graphs and answer the questions that follow

4.8.1 Describe complementary products. (2)

4.8.2 In your answer book, copy the graph for Good Y and illustrate graphically
the impact of an increase in price (from P0 to P1) of Good X on the
complementary Good Y. (6)
4.8.3 Why is it important to the producer to understand the relationship between
compliments? (2)

4.9 Study the graph and answer the questions that follow

31 ECON Grd 11 T2
4.9.1 Name the price shift that takes place in the graph above. (1)
4.9.2 Give ONE reason for the shift in supply from SS to S1S1. (1)
4.9.3 Briefly describe the term complementary goods. (2)
4.9.4 Why would the increase in the price of substitute goods like I-Phone devices
cause an increase in the demand of Samsung devices? (2)
4.9.5 Illustrate the impact of an increase in the petrol price on a complementary
good, using a neatly labelled diagram. (4)

4.10 Read the extract below and answer the questions that follow

4.10.1 Which market structure is represented by the extract above? (1)

4.10.2 Name any ONE method of non-price competition. (1)
4.10.3 Briefly describe the term differentiated products. (2)
4.10.4 Why do firms benefit from collusion? (2)
4.10.5 How does branding and brand loyalty impact new entrants such as T-Touch
mobile to the market? (4)

4.11 Study the graphs and answer the questions that follow

32 ECON Grd 11 T2
4.11.1 Describe the shape of the individual firm's demand curve. (1)
4.11.2 Name the market price in the graphs above. (1)
4.11.3 Briefly explain what long-run cost of a business is. (2)
4.11.4 Why is a firm in the perfect market a price taker? (2)
4.11.5 How is the price of a perfect market influenced in the long run? (2 x 2) (4)

4.12 Study the graphs and answer the questions that follow

4.12.11Describe complementary products. (2)

4.12.2 Why is it important for the producer to understand the relationship between
complementary products? (2)
4.12.3 In your answer book, copy the graph for Good Y and illustrate graphically
the impact of an increase in price (from P0 to P1) of Good X on the
complementary Good Y. (6)

33 ECON Grd 11 T2
4.13 Study the graph below and answer the questions that follow:

4.13.1 Which market structure is depicted by the graph above? (1)

4.13.2 What type of profit is being made by this firm? (1)
4.13.3 Briefly describe the term profit maximization. (2)
4.13.4 Why should Eskom always make an economic profit? (2)
4.13.5 Determine this firm’s economic loss/profit. SHOW ALL CALCULATIONS. (4)

4.14 Study the picture and answer the questions that follow

34 ECON Grd 11 T2
4.14.1 Why do you think an entrepreneur would choose to operate in a
monopolistically competitive market? (1)
4.14.2 What kind of profit can these competitors make in the short run? (1)
4.14.3 Based on the cartoon, give TWO characteristics of monopolistic competition.
(2)
4.14.4 Name TWO similarities between a perfect competitor and a monopolistic
competitor in the long run. (2x1) (2)
4.14.5 How can the two competitors depicted in the cartoon compete? Give examples.
(2x2) (4)

35 ECON Grd 11 T2
4.15 Read the extract and answer the questions that follow

4.15.1 Which company involved in a takeover mentioned above is a South African

company? What does the company produce? (2)
4.15.2 Name TWO examples of oligopoly industries mentioned in the article above.
(2)
4.15.3 Briefly describe the term cartels. (2)
4.15.4 What effect does “uncompetitive industries” have on the economy?
Substantiate your answer. (4)

4.16 Study the graph and answer the questions that follow

36 ECON Grd 11 T2
4.16.1 Identify the market structure above. (2)
4.16.2 What is the market price? (2)
4.16.3 In your opinion, what type of profit will the above-mentioned market structure
make in the long term? (2)
4.16.4 Determine whether this business makes a normal/ economic profit or a loss.
Show ALL
calculations. (4)

HINT: All section B questions have TWO 8 marks questions, numbered according
to questions not like in this document.

QUESTION 5 Paragraph type questions – Middle Cognitive

Each question count 8 marks – thus you must give at least 4 facts

5.1. Differentiate between product market and factor market. (8)

5.2 Examine the implication of ‘non price competition’ in oligopolies. (8)
5.3 Briefly discuss nature of the product and price control as characteristics of
monopolistic competition. (8)
5.4 Discuss barriers to entry and collusion as some of the determinants of market
structures. (8)
5.5 Briefly explain the characteristics of an oligopoly. (8)
5.6 Explain how the demand for a good is affected by the prices of its related
goods. (8)
5.7 Briefly discuss the SMART principle in designing the objectives of business.
(8)
5.8 Briefly discuss nature of the product and entry as characteristics of a perfect
markets. (8)

37 ECON Grd 11 T2
5.9 What reasons would you give for the reaction of consumers to price change
(8)
5.10 With the aid of graphs, explain how an increase in demand of a product affects
the factor market. (8)
5.11 Use a well-labeled graph to explain how the demand curve of milk would
respond when the price of coffee decreases. (8)
5.12 Distinguish between natural and artificial monopolies. (8)
5.13 Discuss competition and transport and communication as characteristics of
perfect markets. (8)
5.14 Discuss non-price methods to increase market share. (8)
5.15 Examine the disadvantages of a monopoly as a market structure. (8)
5.16 Explain interdependence of firms and non-price competition as characteristics
of an oligopoly. (8)
5.17 Use a well-labelled graph and explain how the demand curve of milk would
respond when the price of coffee decreases. (8)
5.18 Discuss FOUR characteristics of a perfect market. (8)
5.19 What would producers benefit by producing at a level that allows them to
experience economies of scale. (8)
5.20 With the aid of graphs show the effect on the price of cars if there is a
decrease in the supply of machinery and equipment to produce them. (8)
5.21 With the aid of a diagram, explain the relationship between average and
marginal revenue when price is constant at all levels of output. (8)
5.22 With the aid of graphs explain the demand curve type of profit and profit
Maximizing points of the oligopolist and the monopolistic firm. (8)
5.23 Compare Perfect competition and the Monopoly in terms of entry and price
control (8)
5.24 Briefly explain how oligopolies can increase their market share. (8)
5.25 Use a graph to illustrate the effect of an increase in the price of beef when
consumers can substitute beef with chicken. (8)
5.26 Graphically illustrate the effect of an increase in the price of beef when
consumers substitute beef for chicken. (8)
5.27 Compare the nature of the product and ease of entry, as characteristics
of a perfect market, with that of an oligopoly. (8)
5.28 Discuss non-price methods to increase market share. (8)
5.29 What reasons would you provide for the reaction of consumers to price
changes? (8)
5.30 Briefly discuss the demand curve of the monopolist. (8)
5.31 Briefly discuss nature of the product and entry as characteristics of a perfect
market.
5.32 Distinguish between TWO types of profit (8)
5.33 Discuss the characteristics of monopolistic competition (8)
5.34 Explain the terms price makers and completely blocked entry in terms of a
monopoly. (8)

38 ECON Grd 11 T2
QUESTION 6 Paragraph type questions – Higher cognitive

6.1 How can changes in the product market effect the factor market? (8)
6.2 Why are relative prices important in the economy? (8)
6.3 How can fast food outlets, namely KFC and Nando’s, compete without
using market price? (8)
6.4 Examine the positive impact of competition on markets (8)
6.5 How would collusion between companies negatively impact on the consumers?
(8)
6.5 Why in your opinion, is collusion among Oligopolists illegal? (8)

SECTION C

HINT: All section C questions have TWO questions 5 & 6 NOT like in this
document. In the examination you will need to answer only one.

ESSAY STRUCTURE

39 ECON Grd 11 T2
 [40]
QUESTION 7

(MARKET STRUCTURES) 40 MARKS

• Discuss in detail the characteristics of a perfect market. (26)
• Examine the positive impact of competition on markets. (10)
A maximum of 8 marks allocated for headings/sub-headings and examples)

QUESTION 8
(MARKET STRUCTURES) 40 MARKS
• Discuss in detail the characteristics of a perfect market. (26)
• Briefly highlight how the perfect market differs from that of a monopolistic
market. (10)

QUESTION 9
RELATIONSHIP BETWEEN MARKETS
• With the aid of clearly labelled graphs and using typical examples of substitute
goods in both production and consumption, discuss demand and supply
relationships. (26)
• Analyse the disadvantages the monopolies possess. (10)

QUESTION 10
• Explain the demand side relationships with the aid of graphs and examples.
(26)
• Why is it important for the product market to consider what is happening in the
factor market? (10)

QUESTION 11
(RELATIONSHIP BETWEEN PRODUCT AND FACTOR MARKET)

•
Discuss in detail the product and factor market and show the interdependence
of these two markets. (26)
• Why is the perfect competitor a price taker? Illustrate your answer with a graph.
(10)
QUESTION 12
(MARKET STRUCTURES) 40 MARKS
• Discuss in detail the characteristics of a perfect market (26)
• Examine the positive impact of competition on markets. (10)

QUESTION 13
RELATIONSHIP BETWEEN MARKETS
• Discuss the FOUR broad types of market structures. (26
• Determine which market structure KFC operates in and give a reason for your
answer. Draw a graph that shows economic profit for KFC. (10)

40 ECON Grd 11 T2
QUESTION 14
• Discuss in detail the characteristics of an oligopoly. (26 marks)
• Use a graph and explain why oligopolists are reluctant to compete on
prices. (10
marks)

QUESTION 15
• Discuss the Oligopoly as an imperfect market structure and pay specific
attention to its characteristics and general behaviour. (26)
• Why in your opinion, is collusion among Oligopolists illegal? (10)
[40]

QUESTION 16
• Compare in detail, the features of a monopoly with those of monopolistic
competition. (26 marks)
• Why would government support or license monopolies? (10 marks)
[40]

41 ECON Grd 11 T2
TOPIC 3: MICROECONOMICS: ELASTICITIES
TERM DESCRIPTION
Ceteris paribus If all other factors remains the same
Complements Two or more products that are connected in some manner to
each and can be used together, e.g. bread and butter
Consumer When consumer make choices about quantity of goods and
equilibrium services it is presumed that the objective is maximum total
utility
Cross elasticity of This is the relationship between changes in the price of one
demand product and the resulting changes in the quantity demanded
of another product.
Demand The quantity bought by customers at different prices
Elasticity This is a measure of responsiveness or sensitivity
Income elasticity Measures the responsiveness of the quantity demanded
against changes in income
Income elasticity of It shows how sensitive the demand for a good is to change in
demand income
Inelastic Inelastic is an economic term used to describe the situation in
which the quantity of a good or service is unaffected when the
price of that good or service changes.
Inferior goods Negative income elasticity of demand as the income of
consumers rises, less demanded of these goods at each price
level
Law of demand The principle that a higher price for a good or a service, other
things equal, leads people to demand a smaller quantity of
that good or service
Law of diminishing States that as a person increase consumption of a product
marginal utility there is a decline in the marginal utility that the person derives
from consuming each additional unit of that product
Luxury goods Goods that are not necessities, the change in income is less
than the change in the quantity demanded of these goods
Marginal utility The utility of an additional unit consumed / It is the additional
(MU) satisfaction a consumer gains from one more unit of a good or
service
Negative marginal It is when the consumption of an additional item decrease the
utility total utility
Normal goods More is demanded of these goods at each price level as the
income of consumers rises
Positive marginal It is when the consumption of an additional item increases the
utility total utility
Price discrimination The practice of charging different prices to different sets of
customers according to difference in price
Price elasticity of Measured in % so we will be dealing with %change in price
demand and the quantity demanded

42 ECON Grd 11 T2
 TERM DESCRIPTION
Price elasticity of It measures the responsiveness of quantity supply to changes
supply in price.
Substitutes Products that are so similar that they can be bought or used
instead of the original good
Total utility (TU) It is the amount of satisfaction a consumer gains from
consuming a given quantity of output
Utility The satisfaction received from consuming a good or a service

𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐷𝑒𝑚𝑎𝑛𝑑𝑒𝑑

𝑃𝑟𝑖𝑐𝑒 𝑒𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑 =
𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑖𝑐𝑒
Formula 2
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐷𝑒𝑚𝑎𝑛𝑑𝑒𝑑 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑃𝑟𝑖𝑐𝑒
𝑃𝑟𝑖𝑐𝑒 𝑒𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑 =
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑖𝑐𝑒
x 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑄𝑢𝑎𝑛𝑖𝑡𝑦

There are five elasticity forms:

Elasticity form Value (meaning)
Perfectly elastic demand x=∞
Relatively elastic demand 1<x<∞
Elasticity of 1 (unitary elasticity) x=1
Relatively inelastic demand 0<x<1
Perfectly inelastic x=0

PRICE ELASTICITY OF DEMAND

Price elasticity of demand can be distinguished into 5 categories

• Perfectly inelastic demand
• Inelastic demand
• Unitary elasticity of demand
• Elastic demand
• Perfectly elastic demand

43 ECON Grd 11 T2
Degrees and curves of price elasticity of demand

PERFECTLTY ELASTIC DEMAND CURVE

Curve and value Explanation
• There is an infinite amount at a
certain price and smallest
change in price results to a large
change in quantity demanded.
• Consumers are willing to buy
any quantity at certain price
• It is also referred to as infinite
elasticity. (PED = ∞)
• The price elasticity of demand is
∞.
• To improve revenue always
increase price never decrease
• This concept is theoretical and
there is not really an example

PERFECTLY INELASTIC DEMAND

Curve and value Explanation
• There is no change in demand
with change in price
• This shows that consumers plan
to buy a fixed amount of the
product, irrespective the price
• Its referred to as perfectly
inelastic
• The price elasticity of demand
is zero (PED = 0)
• It implies a change in price will
cause no change in the
quantity that consumers
demand
• The curve is a vertical line,
which means that, no matter
how price will change, the
demand will stay the same
• Though it’s a theoretical
concept it can be applied to
• Petrol – people continue to buy
as much as before even if there
is an increase as there is no
substitute for petrol

44 ECON Grd 11 T2
 RELATIVELY ELASTIC DEMAND CURVE
Curve and value Explanation
• Occurs when the change in
quantity demanded is
more than the percentage
change in price
• The demand for such
commodity is said to be
elastic. PED›1.
• The relative elastic demand
curve is flatter and its
slope is inclined more
towards the quantity-axis
• Price elasticity is greater
than one, but less than
infinity 
• To improve revenue price
should be reduced

RELATIVELY INELASTIC DEMAND CURVE

Curve and value Explanation
• Occurs when quantity
demanded is less than
percentage change in price
(does not respond as strongly
to changes in price)
• Price elasticity is less than one
but greater than zero (Value of
PED is between 0 and 1)
• The curve is steeper and its
slope is inclined more towards
price-axis
• To improve revenue, prices
should be increased
• Examples are cigarettes and
alcohol as these are habit
forming and users are only very
slightly sensitive to changes in
price (Addiction)

45 ECON Grd 11 T2
 UNITARY ELASTIC DEMAND CURVE
Curve and value Explanation
• When a percentage change
in price causes exactly the
same percentage change in
quantity demanded
• PED = 1
• If a price increases by 10%,
quantity demanded also
increases by 10%
• The value of elasticity is
equal to one
• Price changes have no effect
on revenue

SECTION A: TYPICAL EXAM QUESTIONS

QUESTION 1: Section A – Short Questions

HINT: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct,
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear
correct. The answer will NEVER be two options. Only ONE option is correct. Your
answer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions.
Choose the answer and write only the letter (A–D) next to the question
number.

1.1.1 A change in the quantity requested as a result of a change in income is referred

to as …… elasticity.
A price C offer
B income D supply and income

46 ECON Grd 11 T2
1.1.2 A positive value of cross elasticity of demand will.
A. move in the opposite direction to price.
B not be influenced by price.
C move in the same direction as price.
D be independent of the related goods.

1.1.3 Total utility can be defined as………..

A difference in measurements of utility
B satisfaction gained from consuming the last unit
C measure of the value of satisfaction.
D total satisfaction gained by adding up all utils.

1.1.4 If the price of a packet of cigarettes has gone up, the quantity demanded also
goes up then the demand for cigarettes is …
A perfectly
B elastic
C inelastic
D unitary elastic

1.1.5 An economic term used to describe the situation in which the quantity of a good
or service is unaffected when the price of that good or service changes
A inelastic
B elastic
C elasticity
D unitary elastic

1.1.6 The income elasticity of demand for an inferior good, for example paraffin, will
be…
A less than 0
B equal to 1
C greater than 1
D less than 1

1.1.7 Elasticity of income is ... if Ey = 0

A relatively inelastic
B relatively elastic
C completely inelastic
D completely elastic

1.1.8 The responsiveness of the quality demanded of a particular good against

changes in the price of a related good is deferred to as .. elasticity

47 ECON Grd 11 T2
 A price
B income
C supply
D cross

1.1.9 Satisfaction derived from consuming a product is own as ….. utility

A average
B marginal
C total
D average variable price

1.1.10 The effect of brand loyalty is to make the demand for the product more price
…….
A elastic
B inelastic
C unitary elastic
D perfectly elastic

1.1.11 A change in quantity demanded due to change in income is referred to as ……

elasticity
A income
B supply
C supply and income
D cross

1.1.12 One of the following is amongst the factors that determine price elasticity of
demand.
A Availability of natural resources
B Capital goods
C Time
D Increase in risk

1.1.13 The greater the proportion of the consumer’s income spent on the product, the
more price ... the demand for it is.
A elastic
B inelastic
C unit elastic
D perfectly inelastic

1.1.14 If the price of a packet of cigarettes has gone up, the quantity demanded
remains the same then the demand for cigarettes is …
A perfectly elastic.

48 ECON Grd 11 T2
 B elastic.
C inelastic.
D unitary elastic.

1.2 Choose a description from COLUMN B that matches the item in COLUMN
A.
Write only the letter (A-I) next to the question number (1.2.1 –1.2.10) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Income A When the proportionate change produced in demand
elasticity of demand. is greater than the proportionate change in price of a product.
1.2.2 Negative B The cost of producing one extra unit of output, it can
marginal utility. be found by calculating the change in total cost when output
is increased by one unit.
1.2.3 Relative elastic C With other conditions remaining the same, other things
demand. being equal.
1.2.4 The law of D The solution to the consumer's problem, which entails
demand. decisions about how much the consumer will consume of a
number of goods and services.
1.2.5 Marginal cost E When the consumption of an additional item decreases
the total utility.
1.2.6 Elastic F States, all other factors being equal, as the price of a
good or service increases, consumer demand for the good or
service will decrease, and vice versa.
1.2.7 Inferior G Is an economic term referring to the change in
behaviour that buyers and sellers have in response to a price
change for a good or service.
1.2.8 Consumer H An increase in income reduces demand for the good.
equilibrium
1.2.9 Value I The power that goods or services have to command
other goods or services in exchange.
1.2.10 Ceteris paribus J Measures the responsiveness of demand to a change
in income.

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations
will be accepted.

1.3.1 The relationship between the change in the price of one product and the
quantity demanded of another item.
1.3.2 The price of a good or service, in terms of another good or service
1.3.3 The total satisfaction gained from consuming a product.
1.3.4 The cost advantages due to the larger size of production.

49 ECON Grd 11 T2
1.3.5 When there is no change produced in the demand of a product with change in
its price
1.3.6 An increase in income without a change in quantity demanded.
1.3.7 Change in behavior that buyers have in response to a price change for a good
or service.
1.3.8 The power that goods or services have to command other goods or services in
exchange.
1.3.9 This law states that the quantity producers are willing to sell decreases when
the price
decreases and the quantity supplied increases when the price increases if all
the other factors remain unchanged.
1.3.10 A good whose demand rises as income rises is called
1.3.11 The relationship between the change in the price of one product and the
quantity demanded of another item.
1.3.12 A change in price that causes exactly the same change in quantity demanded.

SECTION B

QUESTION 2:

HINT: When the question requires you to “list” or “name”, you need not write a
sentence but merely one or two words. This MUST be done in bullet form. This
types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 List any TWO ways a firm can increase its scale of operations (2).
2.2 Name any TWO determinants of the price elasticity of demand. (2)
2.3. State any TWO degrees of price elasticity of supply. (2)
2.4 Give TWO factors influencing the price elasticity of supply. (2)
2.5 List any TWO factors determining the price elasticity of demand (2)
2.6 List any TWO categories of price elasticity of demand. (2)

QUESTION 3:

HINT: This types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2

3.1 How does scarcity impact on total utility? (2)

3.2 Why is it important for businesses to evaluate price elasticity of demand? (2)
3.3 What effect does a price elastic demand have on a producer, should the price
of a product increase? (2)
3.4 Why are productively efficient firms make use of cost curves in perfectly
competitive market? (2)
3.5 Why is the cross elasticity of demand important? (2)
3.6 Why is the quantity demanded of habit-forming products, price inelastic? (2)
3.7 How does durability affect elasticity of demand? (2)

50 ECON Grd 11 T2
3.8 What happens to the quantity demanded if the income elasticity of demand is 2
and income increases by 7%? (2)
3.9 Why would a producer of a product with a unitary price elastic demand not use
price to increase profits? (2)
3.10 What price elasticity would a supply curve have if it intercepts the horizontal
(quantity) axis? (2)
3.11 What effect does a price elastic demand have on a producer? (2)

DATA RESPONSE

HINT: All section B questions have TWO data interpretation questions – each total
10 marks. Section B consist of Questions 2-4 not as numbered in this document

QUESTION 4:

4.1. Study the cartoon below and answer the questions that follow.

4.1.1 Identify the phenomenon depicted by the cartoon. (1)

4.1.2 Name ONE example of normal goods. (1)
4.1.3 Explain the term perfectly inelastic demand. (2)
4.1.4 A product has a price elasticity of 1, 58. What kind of elasticity
of demand does it represent? Motivate your answer. (2)
4.1.5 Why is the elasticity of demand important to producers? (4)

4.2 Study the table below and answer the questions that follow.

51 ECON Grd 11 T2
 4.2.1 What type of cross elasticity is depicted in the above table? (1)
4.2.2 Give ONE example of goods for cross elasticity of demand above. (1)
4.2.3 Briefly describe the term cross elasticity of demand. (2)
4.2.4 Explain cross elasticity of demand for unrelated goods. (2)
4.2.5 Use the information above calculate the cross elasticity of demand. (4)

4.3 Study the extract below and answer the questions that follow:

In January a small pizza shop received 350 boxes of Margherita pizzas and
200 boxes of cheese from its supplier. They sold each box of Margherita
pizzas at R30 and a box of cheese at R35. The following month (February)
pizza prices increased to R42 for margherita and R49 for cheese. In the
same month (February) the supplier increased the number of boxes supplied
from 350 to 441 boxes for Margherita pizzas and from 200 to 252 boxes for
cheese.

4.3.1 What is depicted by the extract above (1)

4.3.2 How is the slope of the supply curve? (1)
4.3.3 Briefly describe the term price elasticity of supply. (2)
4.3.4 Explain any challenge that may be experienced by producers when they
have to increase supply in the short run. (2)
4.3.5 Calculate the elasticity of supply for cheese. (4)

4.4 Study the following graphs and answer the questions that follow

52 ECON Grd 11 T2
4.4.1 Which picture represents a perfectly inelastic price elasticity of demand? (2)
4.4.2 Explain elasticity of demand in full. (2)
4.4.3 Why is the change in the quantity demanded larger than the change in price in
picture B? (2)
4.4.4 Calculate the price elasticity of demand (PEd) for picture B. Show all
calculations. (4)

4.5 Study the graph below and answer the questions that follow.

4.5.1 Provide the correct label for curve ‘a’. (1)

4.5.2 If the price would increase from R10 to R15, what is the quantity of goods
that would be demanded? (1)

53 ECON Grd 11 T2
 4.5.3 Explain price elasticity of demand for luxury goods. (4)
4.5.4 Using information from the graph, calculate and indicate the type of price
elasticity of demand. (4)

4.6 Study the graph given below and answer the questions that follow.

4.6.1 According to the graph above, what kind of an elasticity of demand is represented
in the graph? (2)
4.6.2 Briefly explain the kind of elasticity of demand represented in the above graph.
(6)
4.6.3 Give an example of a product with the same kind of elasticity of demand
represented in the above graph. (2)

4.7 Study the graphs given below and answer the questions that follow.

4.7.1 Define the concept ‘Elasticity of demand’. (2)

4.7.2 Identify the degrees of elasticity as shown in the above Graph A and B.
(4)

54 ECON Grd 11 T2
 4.7.3 Distinguish between the TWO types of elasticity of demand in the above
two graphs. (4)

4.8 Study the article below and answer the questions that follow

How income and price changes affect demand

When economists tell us that the demand for basic food products is
‘inelastic’, this is frequently misunderstood to mean that demand will not
decrease if food prices are increased.

In reality, it only mean that the quantity demanded will decrease by a smaller
percentage than the increase in prices.

In addition to the response of demand to price change (price elasticity).

Change in income affect the quantities demanded (income elasticity)

If demand increase by a higher percentage than the increase in prices

(elastic demand) gross income will decrease, iif the quantity demanded
decreases by a lower percentage gross income will increase

4.8.1 Give a reason why food has an inelastic demand. (1)

4.8.2 Name ONE example of normal goods. (1)
4.8.3 Briefly describe the term income elasticity. (2)
4.8.4 Will a producer with a unit elastic demand use price to increase profits?
Explain (2)
4.8.5 Why is the demand elasticity of importance to the economy? (4)

4.9 Study the graph below and answer the questions that follow:

4.9
4.9.1 Identify the type of elasticity illustrated above. (1)
4.9.2 What is the PED of this type of elasticity? (1)

55 ECON Grd 11 T2
 4.9.3 Explain the type of elasticity illustrated above. (2)
4.9.4 Which type of goods would fall under this type of elasticity? Give a
reason for your answer. (2)
4.9.5 Of what benefit is this type of elasticity to the seller? (4)

4.10 Study the table below and answer the questions that follow.

4.10.1 What type of cross elasticity is depicted in the above table? (1)
4.10.2 Give ONE example of goods for cross elasticity of demand above. (1)
4.10.3 Briefly describe the term cross elasticity of demand. (2)
4.10.4 Explain cross elasticity of demand for unrelated goods. (2)
4.10.5 Using the information above calculate the cross elasticity of demand.
(4)

4.11 STUDY the scenario below and answer questions that follow.

4.11.1 Define price elasticity of supply. (2)

4.11.2 Calculate the elasticity of supply for cheese. (6)
4.11.3 Explain any challenge that may be experienced by producers when they have to
increase supply in the short run. (1 x 2) (2)

56 ECON Grd 11 T2
4.12 Study the table below and answer the questions that follow

4.12.1 Name the product with the highest price inelasticity of demand. (1)
4.12.2 Explain perfectly inelastic demand. (2)
4.12.3 Apples have a price elasticity of - 0.58. What elasticity does this indicate?
Substantiate your answer. (3)
4.12.4 Explain the price elasticity of the demand for cigarettes. (2 x 2) (4)

SECTION B
HINT: All section B questions have TWO 8 marks questions, numbered according
to questions not like in this document. Answers must be presented in full sentences

QUESTION 5 Paragraph type questions – Middle Cognitive

5.1. Briefly discuss relative inelastic demand without the aid of a graph. (8)
5.2 Distinguish between elasticity and inelasticity of demand. (8)
5.3 With the aid of a graph, explain the relationship between an increase in
consumption, total utility and marginal utility. (8)
5.4 Discuss time and availability of labour as factors that determine price elasticity
of supply. (8)
5.5 Briefly discuss any TWO characteristics of utility. (8)
5.6 Elaborate on the importance of price elasticity of demand to producers. (8)
5.7 What reasons would you give for the reaction of consumers to price
changes? (8)

57 ECON Grd 11 T2
5.8 Examine the reasons for unequal distribution of income in South Africa. (8)
5.9 Compare positive and negative cross elasticity. (8)
5.10 Briefly explain relative inelastic supply and unitary plastic supply as a degree
of price elasticity of supply, without the use of diagrams. (8)

QUESTION 6 Paragraph type questions – Higher cognitive

6.1 How can the government benefit from having knowledge on elasticity of
demand? (8)
6.2 Why is demand elasticity of importance to the economy? (8)
6.3 Why are relative prices important in the economy? (8)
6.4 How would it help the entrepreneur to increase or decrease the price of his
product if he is aware of the elastic of demand curve? (8)
6.5 Explain the importance of price elasticity of demand to producers. (8)
6.6 Explain the price elasticity of supply for maize in the short and long term. (8)
6.7 Examine the importance of income elasticity of demand to businesses. (8)
6.8 In which way would knowledge of price elasticity of demand support an
entrepreneur to decide if he must adjust the profit levels? (8)
6.9 Briefly debate whether a supplier of chocolates and a supplier of petrol would
both use price increases to increase their profits. (8)
6.10 Explain the price elasticity of supply for maize in the short and long term. (8)
6.11 What reasons would you give for the reaction of consumers to price changes?
(8)

SECTION C

HINT: All section C questions have TWO questions 5 & 6 NOT like in this
document. In the examination you will need to answer only one.

ESSAY STRUCTURE

HINT: Section C – the long question, must be answered in FOUR sections: Introduction
(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:
MARK
STRUCTURE OF ESSAY:
ALLOCATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to 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 saying in the introduction what you are going to discuss in the
body
Body:

58 ECON Grd 11 T2
 Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically Max 26
discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Give own opinion/ Critically discuss/ Evaluate/ Critically
evaluate/ Draw a graph and explain/ / Calculate/ Deduce/ Compare/
Explain Distinguish / Interpret/ Briefly debate/ How/ Suggest / Max 10
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeating facts
already mentioned in the body
• 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

[40]
QUESTION 7
(PRICE ELASTICITY OF SUPPLY) 40 MARKS
• With the aid of graphs describe the various categories of price elasticity of
supply. (26)
• Explain the price elasticity of supply for maize in the short and long term. (10)
A maximum of 8 marks allocated for headings/sub-headings and examples)

QUESTION 8
(PRICE ELASTICITY OF DEMAND) 40 MARKS
• With the aid of graphs, explain in detail the different categories of demand
elasticity. (26)
• Briefly debate whether a supplier of chocolates and a supplier of petrol would
both use price increases to increase their profits (10)

QUESTION 9
PRICE ELASTICITY
• With the aid of relevant graphs, discuss FIVE degrees of price elasticity of
demand (26)
• A couple of factors are determents of the elasticity of demand. Briefly discuss
substitution possibilities as one of those factors. (10)

QUESTION 10
PRICE ELASTICITY
With the aid of graphs, discuss the following types of price elasticity of demand:
• Perfectly inelastic. (8)
• Relatively elastic (8)
• Unitary elasticity (10) (26)
Evaluate the reasons for consumer reactions to price changes. (10)

59 ECON Grd 11 T2