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) 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) 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. 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) 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)