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2.1 Answer the following questions: 2.1.1 Give any TWO examples of fixed costs - NSC Economics - Question 2 - 2024 - Paper 2
Question 2
2.1 Answer the following questions: 2.1.1 Give any TWO examples of fixed costs. 2.1.2 Why is the demand curve horizontal for an individual firm in a perfect market... show full transcript
Worked Solution & Example Answer:2.1 Answer the following questions: 2.1.1 Give any TWO examples of fixed costs - NSC Economics - Question 2 - 2024 - Paper 2
Step 1
Give any TWO examples of fixed costs.
Answer
Fixed costs are expenses that do not change with the level of output produced. Two examples include:
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Rent/Lease for a contract - This is a consistent payment made for the use of a property or equipment regardless of production levels.
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Salaries - Salaries paid to permanent staff are fixed costs, as they are paid irrespective of the business output.
Step 2
Why is the demand curve horizontal for an individual firm in a perfect market?
Answer
In a perfect market, the demand curve for an individual firm is horizontal because:
- The firm is a price taker, meaning it cannot influence the market price of its goods. Instead, it must accept the prevailing market price set by the forces of supply and demand.
- As a result, the firm can sell any quantity of its product at that market price, leading to a horizontal demand curve at that price level.
Step 3
Identify ONE reason for launching an enquiry into the online market in South Africa.
Answer
One reason for launching an enquiry into the online market in South Africa is the lack of effective competition in the online economy, which may result in high prices and reduced choices for consumers.
Step 4
Step 5
Step 6
Explain the role of the Competition Tribunal?
Answer
The Competition Tribunal plays a crucial role in adjudicating matters referred to it by the competition commission, such as:
- Granting exemptions or prohibitions related to mergers.
- Issuing orders on competition-related matters.
- Reviewing decisions made by the Competition Commission, which it may accept, reject, or amend.
Step 7
How has the Competition Act, 1998 (Act 89 of 1998) benefited (advantaged) South Africa?
Answer
The Competition Act of 1998 has benefited South Africa in several ways:
- It has enhanced efficiency in businesses by fostering a competitive environment.
- It has provided consumers with competitive prices and a variety of products.
- It has encouraged participation in the economy from South Africans including through small and medium enterprises (SMEs).
- It has promoted employment by supporting the establishment of new businesses and fair control of ownership.