QUESTION 2 40 Marks 2.1.1 Name TWO kinds of inefficien…
QUESTION 2 40 Marks 2.1.1 Name TWO kinds of inefficiencies that can exist in the imperfect market. (2) 2.1.2 Why does the government sometimes set price ceilings for certain products? (2) [4] 2.2 Study the graph and answer the questions that follow: RIGHT CLICK ON THE BUTTON TO OPEN THE GRAPH IN A NEW TAB: 2.2.1 Mention what the individual firm would be experiencing at each of the price levels from A to D. (4) 2.2.2 Explain the term normal profit. (2) 2.2.3 Explain the shape of the AC-curve. (4) [10] 2.3 Study the extract and answer the questions that follow: FAST-FOOD RESTAURANTS IN THE MONOPOLISTIC COMPETITIVE MARKET South Africa’s fast-food market is extremely competitive, as many sellers fight it out for their share of the consumer market. The fast-food industry accounts for about 40% of the total consumer food-service sales in South Africa, e.g. Fishaways selling fish and Steers selling hamburgers. It is regarded as a hybrid market structure. [City Press] 2.3.1 Why does branding play a major role in this market structure? (2) 2.3.2 Why will the economic profit made by a monopolistic competitor disappear in the long run? (4) 2.3.3 Discuss the hybrid market structure in detail. (4) [10] 2.4 Explain why governments sometimes proceed with a project even if the private costs exceed the private benefits. (8) 2.5 With the aid of a graph, explain why marginal cost must be equal to marginal revenue for profits to be maximised. (8) [40]
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