Directorate: Curriculum FET

ECONOMICS
REVISION BOOKLET
2020 TERM 2

Grade 12
This revision program is designed to assist you in revising the critical
content and skills covered during the 2nd term. The purpose is to
prepare you to understand the key concepts and to provide you with
an opportunity to establish the required standard and the application
of the knowledge necessary to succeed in the NCS examination.
Please Note:
All the ‘.3’ to ‘.5’ questions are categorised as either Middle-order or
Higher – order type of questions. These require a deep understanding
of the subject content and the ability to apply knowledge.
The revision program covers the following topics:
• Perfect markets
• Imperfect markets
• Market failures
 2
1. Study the graph below and answer the questions that follow.

1.1 Identify the marginal revenue curve in the graph above. Hint: Marginal: Additional / Extra (1)
& Revenue = Income
________________________________________

1.2 Which curve is also known as the supply curve? Did you realise that an individual firm (1)
has this? Which one? Why?
________________________________________

1.3 Why will the individual firm not produce more than 60 units? Hint: Check the position of (2)
cost and revenue curves.
___________________________________________________________________________

___________________________________________________________________________

1.4 How does the market demand curve differ from the curve of the individual firm?
(2)
Do you know the difference between market demand and an individual demand?

___________________________________________________________________________

___________________________________________________________________________
Similar to a why question. Why is point A there?
1.5 What is the significance of point A? (2 x 2) (4)
___________________________________________________________________________

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 3

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

2.1 Identify the market structure in the graph above. Identify (the answer is in the graph) (1)
Market structure vs. Type of market
________________________________________

2.2 Give the value of the market price depicted above. (1)
What comes to mind when you think of
value for something? How do you
________________________________________ determine market price?

2.3 How will this equilibrium position change in the long run (long term)? (2)
This question is about firms entering or leaving the market.
___________________________________________________________________________

___________________________________________________________________________

2.4 What conditions must exist for this firm to shut down? Firstly, decide what a (2)
shutdown point is.
___________________________________________________________________________

___________________________________________________________________________
Calculate means work it out systematically. Do
2.5 Calculate the economic loss faced by this firm. you know the difference between: Economic
(4) loss; Economic profit and Normal profit?
 4

3. Study the graph below and answer the questions that follow. Refer to the questions
above and realise that the concepts are the same but different ways of asking
the questions.

3.1 Define the term marginal cost. Refer to question 1.1 – Opposite of Marginal revenue (2)

___________________________________________________________________________

___________________________________________________________________________

3.2 Identify the point on the graph where the firm will shut down. (2)

__________________________________

3.3 Why will the firm shut down at the point identified in QUESTION 3.2? (2)

___________________________________________________________________________

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3.4 How is the supply curve of a perfectly competitive firm determined? (4)

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

4.1 Provide the above graph with an appropriate heading. (2)

_______________________________________

4.2 Which point indicates profit maximisation? Alternative concept: Loss Minimisation (2)
Point
_______________________________________

4.3 How will price and quantity in this market structure change in the long run? (2)

___________________________________________________________________________

___________________________________________________________________________

4.4 Determine the total profit/loss made by this firm. Show ALL calculations. (4)

Remember that you will have to be the one deciding (after you have calculated) if this is a loss or profit situation.
One easy way to determine this is to check our ‘star’ curve – the AC curve. Its position will tell you the answer.
Check where the bottom part of the AC curve lies.
 6

5. Study the article below and answer the questions that follow. Key word: Study!

Pioneer apologises for anti-competitive behavior

Newly appointed Pioneer Foods Group chairperson Zitulele KK Combi on Monday vowed to “turn a
page” and commit to the principles of transparent, competitive behaviour and cooperate fully with the
regulators. Pioneer recently confirmed that it had received notification from the Competition
Commission that it had referred its investigation into the wheat milling market to the Competition
Tribunal for adjudication. Pioneer Foods is named as a respondent in the case together with other
industry participants.
The Competition Tribunal also imposed a penalty of R195-million on Pioneer Foods for its
involvement in a bread cartel and market dominance.
Speaking at a press conference in Cape Town, Combi said: “I will personally engage the Competition
Commission authorities to try to settle the matters amicably, if at all possible, and will ensure that
Pioneer Foods continues to cooperate fully with the regulators.
Source: Mail & Guardian – March 2010

5.1 Name the institute in the extract that investigates anticompetitive behaviour in South Africa.(1)

___________________________________________________________________________
5.2 Identify ONE aspect that was influenced negatively by Pioneer Foods Group anticompetitive
behaviour. (1)

___________________________________________________________________________

5.3 What is the role of the Competition Tribunal?

Do you still remember the other two institutions (2)
under this topic: Commission and Appeals
Court?
___________________________________________________________________________

___________________________________________________________________________
Here be guided the word “market share”. A % portion
5.4 What is meant by market dominance? controlled by a firm in the market. Dominance comes from (2)
dominate which means to ‘overpower others’ in the game.
___________________________________________________________________________

___________________________________________________________________________

5.5 How will Pioneer Foods Group anticompetitive behaviour affect the industrial sector? (4)

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

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 7

6. Study the graph below and answer the questions that follow.
Hint: Make sense of the graph first before you answer the questions.

6.1 How is profit calculated? (1)

_____________________________________

6.2 Which profit does the firm earn at point B? (1)

Check position of C (cost) vs R (revenue) as a clue

_____________________________________
Hint: How much revenue do you make at point zero? –
6.3 Why is the TR curve starting at zero? no production at this point. (2)

___________________________________________________________________________

___________________________________________________________________________

6.4 When is profit maximised in the graph above? Hint: Loss Minimizing Point Q 4.2 (2)

___________________________________________________________________________

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6.5 What are the implications of producing beyond point B? Implications: What does it mean if (4)
this happens? Check point A vs B!
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 8

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

7.1 In which run are the two firms operating? Run could be Long or Short Run. Still remember (1)
the definitions of each? Why this answer?
________________________________________

7.2 Give an example of a fixed cost. (1)

________________________________________
The trick here is to know what the definition
7.3 With reasons, identify a firm that will shut down. of a shutdown point is. Go back to the (4)
definition.
___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

This question requires your

7.4 What, do you think, are the implications of a shutdown? (4)
informed view point.
___________________________________________________________________________

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 9

8. Study the graph below and answer the questions that follow.
By now you should be able to look at a graph and decide what market or even
market structure it represents.

8.1 The above equilibrium position indicates a (short / long) run. How do you know where (1)
the equilibrium position
_______________________________________ is?

8.2 Indicate the profit maximization point. (1)

_______________________________________

8.3 Why will the monopolist produce at quantity 50 instead of quantity 60? (2x2) (4)

Once again, why requires you to explain the reasons. This question is about loss or profit
___________________________________________________________________________
making. How much the firm would make in either quantities will determine your
reasoning.
___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

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___________________________________________________________________________

8.4 Calculate the profit or loss of this monopolist. Show ALL calculations. (4)
 10

9. Read the extract below and answer the questions that follow.

TRANSNET: MONOPOLY BEST IN ITS HANDS

Transnet, South Africa’s state transport company, defended its monopoly of the country’s
eight ports and said it would make no sense for private operators such as France’s Boll
ore SA to enter the market.
“We are sitting on natural monopolies as the ports don’t compete with each other”,
Transnet’s Chief Executive Officer said. “Is a natural monopoly better in private or state
hands?”
Source: www.iol.co.za/business/companies

9.1 Which service is Transnet offering? In other words, what do they do? (1)

___________________________________________

9.2 A monopoly can either be natural or … Remember the two types of monopolies? (1)

___________________________________________

9.3 Differentiate between the natural monopoly and the one in QUESTION 9.2. (4)
The word Differentiate means show the differences between. What aspects are key in showing this
difference? Perhaps think about Costs to enter the market vs the Law created by those in power
___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

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9.4 How, in your opinion, are consumers affected by a monopoly? Your view here is very
important but it must be informed by your knowledge of how monopolies
affect consumers. (4)

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__________________________________________________________________________________________ _

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 11

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

10.1 What type of market is represented by the graph above? (2)

Please note: Type not
structure
______________________________________

10.2 Explain why the MR curve lies below the AR curve. (4)
It always helps to check the numbers in answering this question. The graph
tells you essentially the answer. The demand curve or movement along the
curve will determine what happens to the marginal revenue curve.

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

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10.3 Calculate the profit/loss of the above producer, and show all your calculations. (4)
 12

11. Study the table below answer the questions that follow.

11.1 For which market structure are these costs and revenues? (1)

____________________________________________

11.2 At what level of output is the firm making normal profit? Give a reason for your answer. (4)
Hint: In Business Studies, the refer to this point as a ‘break-even’ point – zero
profit made.

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11.3 Calculate the values of A–E. (5)

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 13

12. Study the pictures below and answer the questions that follow. Hint: A cartoon is
visual literacy. It requires that you take note of all the elements portrayed.
The answers to the questions are in the cartoon itself.

12.1 Identify TWO barriers of entry as portrayed by the cartoon. Barrier means (2 x 1) (2)
something that
prevents entry into
_______________________________________
a space.

_______________________________________

12.2 What type of monopoly is depicted in the above cartoon? Refer to Q 9.2 (2)

_______________________________________
When describing something, you can use your own words.
12.3 Briefly describe the term monopoly. It is different from defining it.
(2)

___________________________________________________________________________

___________________________________________________________________________

12.4 Why can’t a monopolist charge excessively high prices for his products? (2 x 2) (4)

This is strange! A monopolist has a 100% control of the market. Surely s/he can charge any price?

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 14

13. Study the illustrations below and answer the questions that follow.

13.1 Identify the products produced by the businesses above. (1)

___________________________________

13.2 Which market structure is depicted above? (1)

___________________________________

13.3 Why will a new business find it difficult to enter into this type of market? (2)

___________________________________________________________________________

___________________________________________________________________________

13.4 What does interdependency of businesses in this market structure imply? (2)

___________________________________________________________________________

___________________________________________________________________________

13.5 Explain, without the use of a graph, why businesses in this industry will be reluctant to
decrease the price of their product. Hint: imagine various selling prices and
quantities. Calculate revenue at each of these selling prices and quantities.
(2 x 2) (4)
___________________________________________________________________________

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___________________________________________________________________________

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

14.1 To which market structure is the kinked curve related? A kink means a sharp (1)
twist or a bent curve
_________________________________

14.2 What is the output level in the graph above? The quantity which businesses will have to
(1)
produce for feasibility reasons. Do your
_________________________________ calculation before you answer.

14.3 What would the effect be on total revenue if the oligopolist increased his price from R50 to
R60? Show calculations. Remember how to calculate TR and check the
differences between revenue made at either of the two price levels. (4)

14.4 Advise the oligopolist on how to increase his market share in this industry. (4) Given the
above calculation, does an increase or decrease of prices work? If not, how
else can businesses in this market make profits?
___________________________________________________________________________

___________________________________________________________________________

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 16
15. Read the article below and answer the questions that follow.

Competition Commission raids glass companies in collusion investigation.

The Competition Commission has begun an investigation into alleged collusive

conduct involving Glasfit, PG Glass, Shatterprufe and Digicall. This is typical cartel
behaviour.
Shatterprufe allegedly supplied PG Glass and Glasfit with automotive glass, while
Digicall processed automotive glass-related insurance claims on behalf of PG Glass
and Glasfit.
The investigation pertains to claims made by some independent glass fitment
operations, alleging that PG Glass carried out collusive activities preventing
competition in the automotive glass repair and fitment market.
[Adapted from www. bdlive.co.za, 23 March 2016]

15.1 Name the organisation that investigates anti-competitive behaviour of companies in South
Africa. (1)

___________________________________________

15.2 What anti-competitive conduct was investigated, according to the extract? (1)

___________________________________________

15.3 Briefly discuss the term cartel. Example: OPEC (2)

___________________________________________________________________________

___________________________________________________________________________

15.4 What corrective measures can be instituted against these companies if they were found
guilty? (2)

___________________________________________________________________________

___________________________________________________________________________

15.5 How can the collusive behaviour of these glass companies affect the economy? (2x2)(4)

Consequences of collusion on the economy

___________________________________________________________________________

___________________________________________________________________________

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16. Study the extract below and answer the questions that follow.

THE IMPACT OF OLIGOPOLIES ON THE ECONOMY

The pharmaceutical industry is becoming an oligopoly due to the staggering costs of
developing and marketing new drugs and because of patents that protect new products
from competitors. It can cost more than R1 billion to develop a new drug, get it approved
by the Food and Drug Administration and bring it to market, according to Forbes
magazine. With those kinds of upfront costs, only a handful of companies, including Pfizer,
Merck and Novartis, can afford to create and sell new products. The government grants
those companies extended patents on their drugs, and these patents protect drug
developers from competitors for many years.
The smartphone market is similarly dominated by a handful of companies, the most
powerful two being Google Android and Apple. These companies have deep relationships
with the handset providers and are able to have their systems pre-installed on each phone.
As with computer operating systems, these relationships become self-reinforcing as they
grow.
[Adapted from Business Report, October 2014]

16.1 Which type of industries mentioned in the extract are said to be oligopolistic? (2 x 1) (2)

______________________________________

______________________________________

16.2 Define the term oligopoly. Oli = a Few (Greek origin) (2)

___________________________________________________________________________

___________________________________________________________________________

16.3 Why it is important for these companies to have trademarks for their products? (2)

___________________________________________________________________________

___________________________________________________________________________

16.4 How do cartels and price leadership differ in terms of the way prices are manipulated? (4)

___________________________________________________________________________

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

17.1 Identify the maximum price from the graph. If there is a maximum price, there must also be a (1)
minimum price. Ceiling Prices vs Floor Prices.
________________________________________

17.2 Which quantity will be supplied when the maximum price is enforced? Why are these (1)
enforced?
________________________________________

17.3 Which role does the government play in redistribution of wealth? (4)

___________________________________________________________________________

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17.4 How will the maximum price affect the economy? (4)

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 19

18. Study the graph below and answer the questions that follow. Hint: Check the
direction of the arrows. Leftward movement = Decrease and rightward / upward
= increase.

18.1 Identify the price of cigarettes before a tax was imposed on it. You must know how to (1)
read and identify original
______________________________________ equilibrium point

18.2 What quantity is demanded after the government imposed a tax on cigarettes? (1)

_____________________________________

18.3 Clearly distinguish between merit goods and demerit goods. Prefix ‘de’ implies opposite (4)
of what merit means.
___________________________________________________________________________

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18.4 Use the graph above and explain how a tax on cigarettes will reduce market failure. (4)

___________________________________________________________________________

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 20

19. Study the cartoon below and answer the questions that follow. Market (s & d) is not
doing what it is
supposed to do

This is testing your knowledge of

19.1 Which cause of market failure is illustrated above? (2)
reasons for market failure. Ensure
that you understand these!
____________________________________________

19.2 Briefly describe the term market failure. (2)

___________________________________________________________________________

___________________________________________________________________________

19.3 How can labour as a factor of production become more mobile? (2)
___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

19.4 How does the South African government attempt to solve the problem of income
inequality? (2 x 2) (4)

___________________________________________________________________________

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 21

20. Study the information below and answer the questions that follow.

20.1 Identify any TWO sectors in South Africa where minimum wages are applied in the extract
above. (2 x 1) (2)
Minimum means at the bottom but look at where it is positioned on the graph.

___________________________________

___________________________________

20.2 Briefly describe the term minimum wage. (2)

___________________________________________________________________________

___________________________________________________________________________

20.3 What is the advantage of having a national minimum wage instead of a minimum
wage per sector? (2)

___________________________________________________________________________

___________________________________________________________________________

20.4 Refer to the graph above and explain the implication of the R3 500 minimum wage
imposed by the government. Hint: Base your discussion on the graph (2 x 2) (4)

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________
 22

21. Study the information below and answer the questions that follow.

Note: Numbers (data) are very important to understand in such a question.

21.1 In the information above, who is more likely to use a CBA when making decisions? (1)
Sometimes, the answer is in the questions. Pay
____________________________________ attention and use this to your advantage.

21.2 Identify ONE project in the data above that the government is considering for this
community. (1)

____________________________________

21.3 Give a reason why a CBA will NOT be of use to the mechanic in the cartoon. (2)

___________________________________________________________________________

___________________________________________________________________________

21.4 According to the data above, which project would be best for the community? (2)

___________________________________________________________________________

21.5 Why do you think it is important to do a CBA when deciding about large projects? (4)

___________________________________________________________________________

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