MACROECONOMICS

TOPIC 1:ECONOMICS: BASIC CONCEPTS,

FACTORS OF PRODUCTION
WEEKS 1-2

Analysis of the factors of production

and their remuneration

Investigation of community
participation in local
economic planning and
activities

Accessibility of the
economically
marginalised groups
 TEACHER GUIDE GRD 11

QUESTIONS

SECTION A: TYPICAL EXAM QUESTIONS

QUESTION 1: Section A – Short

Questions

: 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  inputs into the production process.

1.1.2 A  economic rent
1.1.3 A  inputs
1.1.4 A  inelastic
1.1.5 A  renewable
1.1.6 B  entrepreneur
1.1.7 B  unskilled labour
1.1.8 C  fixed
1.1.9 B  transfer earnings
1.1.10 B  human
1.1.11 C  HIV and Aids
1.1.12 D  empowerment
(12 x 2) (24)

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 –
1.2.11) in the ANSWER BOOK.

1.2.1 H  They cannot be produced without any human input.

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1.2.2 F  Refer to those goods and services which help in the production
process.
1.2.3 G Any and all particular geographical locations, mineral deposits,
forests, water, arable land, sun-shine, fish stocks, atmospheric quality etc.
1.2.4 B  Is made possible by the availability of natural resources
1.2.5 I  The remuneration received from the sale of a factor of production
which is scarce.
1.2.6 D  The quantity of labour depends on the size of the population and the
proportion of the population that is able and willing to work.
1.2.7 C  Dividing the process of production into distinct and several
component processes and assigning each component in the hands of a
labourer or a set of labourers, who are specialists in that particular process.
1.2.8 E  All man-made physical assets like plant and machinery, tools,
buildings, roads, dams and communication, etc., are the various forms of
physical capital.
1.2.9 L  The remuneration received for the supply of labour by households
1.2.10 K  The investment that is made in the form of money or monetary
instruments.
1.2.11 A  The process whereby something or someone is pushed to the edge
of a group and accorded lesser importance, this is predominantly a
social phenomenon by which a minority or sub-group is excluded, and
their needs or desires ignored. (11 x 1) (11)

1.3 Provide the economic term/concept for each of the following

descriptions. Write only the term/concept next to the question number.

1.3.1 Entrepreneurship
1.3.2 Net profit
1.3.3 Technological knowledge
1.3.4 Capital formation
1.3.5 Nominal wage
1.3.6 Depreciation
1.3.7 Entrepreneurs
1.3.8 Economic goods
1.3.9 In service training
1.3.10 Marginalisation
1.3.11 Rent (11 x1) (11)

SECTION B

SECTION B: TYPICAL EXAM QUESTIONS

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QUESTION 2:

: When the question requires you to “list” or “name”, you need not write
a
sentence but merely few words or a phrase. 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 examples of non-renewable resources.

• Gold
• coal
• fossil 
• fuel
• platinum (2 x 1) (2)
(Accept any other relevant correct response)

2.2 Name any TWO main economic activities in modern society)

• Production
• Consumption
• Exchange      (2 x 1) (2
(Accept any other relevant correct response)

2.3 Name any TWO broad categories of labour

• Higher level (skilled)
• Intermediate (semi-skilled)
• Lower level (unskilled) (2 x 1) (2)
(Accept any other relevant correct response)

2.4 Name TWO examples of capital goods.

• Machines
• Tools
• Equipment
• Factories
• Office buildings (2 x 1) (2)
(Accept any other relevant correct response)

2.5 Name TWO factors which must be present to enable a country to make
use of its natural resources.
• Quality of natural resources
• Availability of skilled labour
• Technology (2 x 1) (2)
• Accessibility of natural resources
(Accept any other relevant correct response)

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2.6 Name any TWO components of capital

• Physical
• Financial (2 x
1) (2)

2.7 Name TWO factors that influence the labour force participation rate •
The age distribution of the population 
• Retirement and social security 
• Economic structures 
• Emancipation of women  (2 x 1) (2)
(Accept any other relevant correct response)

2.8 List any TWO forces that determine interest rates. (2 x 1) (2)
• Savings 
• Spending
• Borrowing
• Investment
• Exchange rates (2 x 1) (2)
(Accept any other relevant correct response)

2.9 Name any TWO strategies that the government implement to

address socio- economic inequality.
• Broad Based Black Economic Empowerment Policy
• Human Resource Development Strategy.
• SETA’s.
• National Youth Agency
• Expanded Public Works Programme (2 x
1) (2)
(Accept any other relevant correct response)

2.10 Name TWO factors that influence the labour force participation rate.
• The age distribution of the population
• Retirement and social security
• Economic structures
• Emancipation of women (2 x 1) (2)
(Accept any other relevant correct response)

QUESTION 3:

: This types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences

3.1 Why is the supply of land fixed?

• The resources are not man-made 

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• These resources are scarce in relation to the demand for them 

• The availability of non-renewable resources cannot be increased if
more resources are required  (2 x
1) (2)
•
(Accept any other correct relevant response)

3.2 Why is it important for government to use the procurement

system?
• To address past discriminatory policies and practices 

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To redistribute wealth by channelling funds to businesses belonging to
previously disadvantaged groups 
• To achieve anti-discrimination objectives in a workplace 
• To direct investment funds into underdeveloped and disadvantaged
rural communities by means of conventional constructional projects
 • To the participation of SMME’s in providing goods and services
for
government procurement  (2 x 1) (2)
•
(Accept any other correct relevant response)

3.3 What will happen to the rent on land that is situated far from the market,
if the government builds a railway line to connect the farmer to the
market? (1 x 2) (2)
• The rent will increase, since the land is now more accessible to the
market. (Accept any other relevant correct response)

3.4 What do we mean when we say that labour is heterogeneous?

• We mean that people differ in terms of attitude, personalities, physical
attributes and productivity (1 x 2) (2)
(Accept any other relevant correct response)

3.5 Why is the quality of labour more important than the quantity of labour?
• The quality of labour determines how productive the labour is, the
more productive the labour is, the more the productionPP. (1 x
2) (2) (Accept any other relevant correct response)

3.6 Since Natural resources are scarce, what would be your suggestion as
to how they should be used? (1 x 2) (2)
• Natural resources should be used efficiently
(Accept any other relevant correct response)

3.7 Why is it that land and labour are referred to as primary factors of
production?
• Because land and labour are naturally given (1 x 2) (2)
(Accept any other relevant correct response)

3.8 How does the government use procurement to distribute wealth?

• By channelling funds through businesses belonging to previously
disadvantaged groups. (1 x 2) (2)
(Accept any other relevant correct response)

3.9 How does a high level of education influence the ability of an

individual to get employed? (1 x 2) (2)
• It provides skills to do a specific job.

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• It provides knowledge to do specific job.
(Accept any other relevant correct response)

3.10 What effect will HIV/Aids have on the supply of labour? (1 x 2) (2)
• The supply of labour will decline due to death caused by HIV/AIDS
related illnesses. (1 x
2) (2)
(Accept any other relevant correct response)

3.11 What impact does the Expanded Public Works Programme have on your
local community?
• Community projects are earmarked
• Jobs are created while at the same time, community upliftment takes
place.
• Poverty is alleviated.
• An income for the unemployed is provided. (1 x 2) (2)
(Accept any other relevant correct response)

3.12 How effective is local government in promoting the role of community
participation?
• Government has absorbed so many local communities to the
economic mainstream through government funding to support SMME.

• Through subsidies granted to rural areas to promote entrepreneurship.

• NYDA is also used to assist young people who want to venture into
business (1 x 2) (2)
(Accept any other correct, relevant response)

DATA RESPONSE

: 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 DATA RESPONSE

4.1.1 What is depicted by the cartoon above?

• The factors of production (1)

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4.1.2 Which factor above requires the willingness and ability to combine the
other three factors for production to take place?
• Entrepreneur (1)
4.1.3 Describe the term entrepreneur
• An enterprising and ambitious person who has the ability to coordinate
and combine the other factors of production efficiently and
profitably. (2)
(Accept any other relevant correct response)
4.1.4 How does the market reward an entrepreneur and punish an
entrepreneur?
Successful entrepreneurs are rewarded with profits, while unsuccessful
• Entrepreneurs are punished by bankruptcies (2)
(Accept any other relevant correct response)

4.1.5 Why do we need entrepreneurs in the economy of South Africa? (4)

• Entrepreneurs are the people who organise and assume the risk of
staring and running a business
• Entrepreneurs make an important contribution to solving the economic
questions of what to produce, how to produce and for whom to
produce. (Accept any other correct alternative response)
(2 x 2 ) (4)

4.2 DATARESPONSE

4.2.1 What factor of production is represented in the above extract? (1)

• Natural resource/land

4.2.2 Who is the current Minister of Water and Sanitation? (1)

• Lindiwe Sisulu

4.2.3 Describe the term natural resources.

• All the aspects of nature, including mineral deposits, water, land,
natural forests, marine resources, animal life, the atmosphere and
vegetation(2) (Accept any other correct alternative response)

4.2.4 What was the aim of the 2016 Water Week?

• Aimed at re-emphasising the importance of water, the scarcity of water
and the need to manage water in a sustainable way.
(2)

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(Accept any other relevant correct response)
4.2.5 What is the impact of scarcity on renewable and non-renewable
resources?
• Renewable resources can be replaced by nature over even after
exploitation time ,e.g. trees, wildlife soil.
Non-renewable resources cannon be replaced over time once exploited e.g.
coal, platinum oil. (2 x 2) (4)
(Accept any other relevant correct response)

4.3 DATA RESPONSE

4.3.1 List ONE factor that influence rent
• Demand for the product or services produced
• Climate
• Quality of natural resources

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Technology
• Location (1)
4.3.2 What do we call the rent charged for the exploitation of mines?
• Dead rent       (1)
4.3.3 Briefly describe the term economic rent’.
• Is the remuneration or payment made for the use of factors of
production
which is limited in supply. (2)
(Accept any other relevant correct response)
4.3.4 Explain why the supply of land is fixed.
• The supply of natural resources is fixed and limited to what nature provides
us.
• It is limited because the resources are not man made. 
• These resources are scarce in relation to the demand for them.
• The availability of non-renewable resources cannot be increased if
more resources are required. 
• It is possible, however, to exploit more of the available resources.
• The disadvantage of doing this that they will be used up more
quickly.
• New technology can improve the productivity of some natural
resources.
(Accept any other relevant correct response) (2)
4.3.5 Calculate the economic rent according to the graph?
• Economic rent = R35 000 – R10 000  = R25 000  (4)

4.4 DATA RESPONSE

4.4.1 According to the above image, what is the demand of the workers?
• A living wage (1)
4.4.2 Mention any ONE characteristics of labour
• Aim is to earn an income. 
• It is part of the owner. / Cannot be separated from the worker 
• It cannot be stored. 
• It differs in quality. 
• Supply cannot be increased suddenly (1)
(Accept any other relevant correct response)

4.4.3 Describe the term labour

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• Labour is a measure of the work done by human beings.it is the human
input in the production process. 
• The input can either be mental (e.g. an accountant), or physical (e.g. a
driver).
It includes all human effort exerted with a view to obtaining reward in the form
of income. (2)
(Accept any other correct and relevant response)

4.4.4 What is the difference between nominal wages and real

wages?
Nominal wages refer to the amount of money that the worker receives at the end of
the period, whereas real wages refer to the value of goods and
services that a worker can buy with the nominal wage. (2)(Accept
any other relevant correct response)

4.4.5 How can the productivity of labour be improved?
•Business and government can increase labour productivity of workers
by direct investing in or creating incentives such as rewards,
certificates, bonuses, increased wages & salaries etc.
• Investment in physical capital: Increasing the investment in capital
goods including infrastructure from governments and the private sector
can help productivity while lowering the cost of doing business.
• Quality of education and training: Offering opportunities for workers to
upgrade their skills, and offering education and training at an
affordable cost, help raise a corporation’s and an economy's
productivity.
• Technological progress: Developing new technologies, including hard
technology like computerization or robotics and soft technologies like
new
modes of organizing a business or pro-free market reforms in government policy can
enhance worker productivity. (2 x 2) (4)
(Accept any other correct and relevant response)

4.5 DATA RESPONSE

4.5.1 Which institution is responsible to publish the information depicted on

the table above?
• Statistics South Africa (1)

4.5.2 In which year was employment at its highest?

• 2009 (1)

4.5.3 What trend do you observe in the working age population from the
table?

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• There is an increase/increasing.
(2)
(Accept any other relevant correct response)

4.5.4 Explain the term Not Economically Active (2)

• Are people that are not suitable for work. 
• People over the age of 65.  • Those under the age of 15 years old.
(Accept any other relevant correct response)

4.5.5 Calculate the unemployment rate for 2011

4 364/17 482 X 100 = 25% OR 24,9% (4)

4.6 DATA RESPONSE

4.6.1 Identify the market equilibrium for labour in the graph. (1)
• EL
4.6.2 According to the above graph, how are wages determined in the
labour market? (1)
• By the interaction of demand for labour and supply for labour/Demand
and
Supply

4.6.3 Briefly describe the term labour? (2)

• Application of human mental and physical effort to produce goods and
services with the view of obtaining a reward in the form of income.
(Accept any other correct relevant response)

4.6.4 Explain how HIV and AIDS affect the quality of labour
• The supply of skilled and experienced workers will decline 
• it will influence productivity of workers 
• they cannot perform their tasks efficiently 
(2)
(Accept any other correct relevant response)

4.6.5 How does the national development plan propose to increase 

employment and economic growth?
• improving labourers’ skills by means of better education and training

• improving the functioning of demand and supply in the labour market

• stimulating exports where South Africa has a comparative advantage
e.g.
mining and tourism 

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• snowballing investment in social and economic infrastructure 
• raise productivity giving more people an opportunity to participate in
the economy 
(Accept any other correct relevant response) (2 x 2) (4)
[10]

4.7 DATA RESPONSE

4.7.1 Classify the type of labour that is performed by person B. (1)

• Semi-skilled.

4.7.2 Under which of the categories above (A, B or C) would you classify the
bulk of South Africa’s labour force?
C (unskilled) (1)

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4.7.3 Describe the term specialisation of labour.

• The separation of work process into a number of tasks, with each task
performed by a separate person or group of persons.  (2)
(Accept any other relevant correct response)

4.7.4 Briefly explain any ONE characteristic of labour.

• The ownership of labour does not belong to the firm but to the person
selling the labour service.
• Labourers need to be physically present when their services are
used.
• Labour cannot be stored or hoarded for use in the future.
• The geographical and occupational mobility of labour is relatively
low.
• Labour is heterogeneous, it has many different characteristics
• The use of labour by a firm is a bargaining process between the firm
and the worker.
• It is not possible to increase the supply of labour.
(2)
(Accept any other relevant correct response)

4.7.5 Why would you regard labour as an important factor of production?

• Production requires labour (physical and mental effort). 
• Economy therefore needs a suitable labour force in order to
grow.
• The labour force needs to have the right number of skilled and
unskilled workers available.
• Education is important in developing labour in a country. • The
more educated a labour force is, the more productive they are.
• Many South African businesses are labour intensive and so labour
costs make up a big part of production costs.
• Trade unions play an important role, however, in protecting the rights
and dignity of workers, protecting their wage and encouraging
employers to invest more in adult education and training.
(Accept any other relevant correct response) (2 x 2)(4)
[10]

: 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

5.1 Briefly explain the availability and use of factors of production as

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methods of growing the economy. (8)

• Natural resources: Sustainable use of natural resources to create

goods and services.
Natural resources should be used in such a way that future generations will be able
to meet their needs.
• Land can be used for new purposes that will render better returns.
• Labour force: the total working population must increase in relation to
the total population.
• Knowledge and skills of the labour force should be increased through
education.
• Capital investment: should be increased.
• New capital layout must be created and existing layouts should be
expanded.

•
This will increase the production capacity of a country.
•
Entrepreneurship: should be encouraged. More businesses open and
more employment opportunities arise.
• Technology: must improve. Better production techniques can be
developed to increase productivity.
(Accept any other correct relevant response)
(Maximum of 4 marks for mere listing of facts)

5.2 Discuss the economic significance of land? (8)

•
Agriculture, forestry, mining and fisheries form a significant part of the SA
economy.
• Natural resources form the basis of all primary economic activities
• They are used as raw material in the production process.
• They provide opportunities for international trade, e.g. our minerals give
us the opportunity to sell to other countries that need them.
• We earn foreign currency from those exports and then use the money to
import those natural resources that we need like oil.
• Natural resources have a direct impact on the economic development of
a country.
• Economic activity is made possible by the availability of natural
resources.
(Accept any other correct relevant response)
(Maximum of 4 marks for mere listing of facts)

5.3 Differentiate between capital widening and capital deepening (8)

Capital widening.

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Occurs when the capital stock grows at the same rate as the labour force,
resulting in the average amount of capital per worker remaining the
same.
• For example, in a team of 20 workers there are ten 10 shovels (capital
goods), giving a labour – to capital ratio of 2: 1.
• If the workers increase to 40, the employer has to invest in a further 10
shovels to maintaining the labour – to-the employer has to invest in a
further
10 shovels to maintain the labour –to-capital ratio.
• The workers can now maintain their previous production level per worker.
There will be no economic growth, no change in the real GDP and the
real
GDP
per capita will remain unchanged with no change in the standard of living.

Capital deepening
• Occurs when the amount of capital per worker is increased, that is, when
the rate of increase in capital stock is higher than the rate of increase in
the labour force.
• For example, it would imply that when the number of workers increases
from 20 to 40, the employer invests in a further 20 shovels to give a total
of 30 shovels.
• This increases the capital-to-labour ratio from 2 : 1 (or 4 : 2) to 4 : 3.
• This will allow the team of workers to perform more work and increase its
efficiency.
• So, capital deepening results in real economic growth that will raise the
standard of living of the population.
• This is because it leads to a higher real GDP and higher GDP per capita.

(Accept any other correct relevant response)

(Maximum of 4 marks for mere listing of facts)

5.4 Briefly explain any TWO factors that influence the profit of an
entrepreneur. (8)
The skills of the entrepreneur:
• Entrepreneurs who can control costs, produce efficiently and estimate
their prices and sales correctly, are likely to have higher profits than
those who lack similar skills, they are competent.

Production processes and techniques

• Entrepreneurs need to decide on the production methods they are going
to utilise
• Decisions have to be taken on whether they are going to produce on a
large scale or produce when they receive an order.

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• The machinery used for the production of the goods will determine the
production costs as well as the prices of the products.

The demand for the product

• A demand for the products impacts on profit. If the demand for the
product is high, sales generated will increase, the profits in turn will be
high and vice versa.
(Accept any other correct relevant response)
(Maximum of 4 marks for mere listing of facts)

5.5 Explain uneven distribution and the fixed supply as characteristics

of natural resources. (8)
Uneven distribution of natural resources
Natural resources such as minerals and water are not evenly distributed over the
earth
• Some countries have many resources and others have very few fixed
supply of natural resources
Natural resources are scarce in relation to the demand for them.
• Resources such as land, oil,, minerals etc. once destroyed cannot be
restored in a lifetime.
(Accept any other correct relevant response)
(Maximum of 4 marks for mere listing of facts)

5.6 Outline the characteristics of capital (8)

• Capital is man-made.
• When capital is being consumed, it depreciates.
• In national accounts it is referred to as consumption of fixed capital.
• Capital formation (Investment / production of capital goods) requires a
sacrifice of savings.
• For the production of capital goods to be possible, current consumption
should be sacrificed.
• Money capital can be converted into physical capital.
• Capital investments increase production efficiency.
• Capital stock is consumed in the process of production.
• Capital goods do not have an unlimited life even though they last over
time.

• Machinery, plant, equipment, buildings, dams, bridges and roads are all
subject to wear and tear.
• Capital can become outdated or obsolete because of technological
progress.

• Capital is a passive factor of production.

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•
Capital is not an indispensable factor of production, i.e. Production is
possible even without capital.
• Capital has the highest mobility.
• Supply of capital is elastic.
(Accept any other correct relevant response)
(Maximum of 4 marks for mere listing of facts)

5.7 Discuss the entrepreneur as a creator of employment and ensuring

competition. (8)
Creates employment
• Many entrepreneurs in the informal sector start their own micro-
businesses to create their own employment.
• These businesses create employment for others.
Ensures competition
• Entrepreneurs create competition .
They challenge those that have profitable businesses.
• The supply of entrepreneurs to the market is therefore also dependent on
the level of profitability.
• The higher the level of profitability, the more workers will change into
entrepreneurs.
• This will increase the amount and variety of goods and services available,
thus consumers will be in a better position . (Any other correct
relevant response)
(Maximum of 4 marks for mere listing of facts)

QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER

QUESTIONS REQUIRE THE LEARNERS TO USE HER/ HIS
CRITICAL THINIKING SKILLS.
Higher order questions are grounded in the content. These types of
questions
test critical thinking, where candidates should be able to apply their knowledge, through logical
reasoning and also have an awareness of their current economic climate. Content (covered by
discuss/examine/describe/ analyse/explain/evaluate/compare/assess/justify/construct/calculate) can
be assessed as higher-order questions. Answers will not necessarily be found in textbooks.

6.1 Why is capital formation important to the South African economy?

(8)
• Capital goods increase the efficiency of labour and increase all the
economic activities
• Increases the country’s ability to produce wealth

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•
• When the stock of fixed capital in a country grows at a rate that is greater
than the growth rate of the labour force, it will lead to an increase in real
GDP
• Creates jobs/job opportunities
• Shows how much of the new value added in the economy is invested
rather than consumed
(Accept any other correct relevant response)

6.2 Why is it difficult to change the real capital? (8)

It is difficult to change real capital because:
• It loses its mobility
• Using real capital for different purposes
• Building is occupationally mobile because it can be used for different
purposes

• It is geographically immobile because it is impossible to move the

building to a different place
(Accept any other correct relevant response)

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6.3 How do the natural resources enrich our lives. (8)

• Land provides space for walking and the enjoyment of natural
surroundings .
• Provides fish, water and is also a source of recreation and relaxation.
• The atmosphere provides space to fly airplanes and to communicate
electronically.
• Also provides fresh oxygen-rich air and clean, clear skies.
• It allows jobs to be created in tertiary industry.
(Accept any other correct relevant response)

6.4 How can community participation impact on the entrepreneur? (8)

• Community forums together with local government can play an important
part in the development of entrepreneurs through skills development,
financial assistance and making the best use of natural resources in town
or region.

•
Community participation can help to reduce unemployment, alleviate poverty
and turn around a low regional growth rate.
• Local governments need businesses to stimulate economic activities in the
local community to boost economic growth.
• The community can participate in the following ways
• Meetings called by businesses or local government
• Community members can take part in local elections
• Communication members can take part in public campaigns
• Community forums.
(Accept any other correct relevant response)

6.5 Analyse how the government's effort to assist the economically

marginalised groups in South Africa. (8)
• Since 1994, labour policies have been put in place to protect the rights of all
employees.
• To help this process we have the Broad-Based Black Economic
Empowerment laws and the Employment Equity Act of 1998.
• The National Skills Development Strategy has enabled 3,6 million people to
take part in workplace learning and some 50 000 unemployed young people
to take part in leadership programmes.
• Sector Education and Training Authorities (SETAs) play an important role in
providing the training needed for the skills demanded by industries.
• Affirmative action plays an important part in new appointments in the
workplace.
• Land distribution and land restitution, to correct imbalances of the past.
(Accept any other correct relevant response)

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6.6 How successful has the government been in creating opportunities for
previously disadvantaged individuals through empowerment? (8)
• Two acts in particular create opportunities for the previously disadvantaged
individuals to access the mainstream economy. Employment Equity Act
(EEA)
• It deals with the prohibition of unfair discrimination and affirmative action.
• The unfair discrimination part of the act requires employers to remove unfair
discriminatory policies and practices.
• Ensures that present employment policies promote the empowerment of
previously disadvantaged individuals.
• Employed workforce should mirror the economically active profile of the
South
African population.
Broad Based Black Economic Empowerment (BBBEE).
• This act provides the foundation for the transformation of the South African
economy so that the number of black people that own, manage and control
the country’s economy can increase significantly and thus decrease (racial)
income inequalities substantially.
• In terms of this Act, government published codes of good practice that serve
as a guideline for business and other enterprises to transform.
(Any other correct relevant response, indicating the government creating
opportunities for previously disadvantaged people through empowerment
initiatives)
(Accept any other correct relevant response)

SECTION C

SECTION B: TYPICAL EXAM QUESTIONS

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

: 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:

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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:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically Max 26
discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/
Evaluate Additional part: Critically discuss/ Evaluate/ Critically
evaluate/Calculate/ Deduce/ Compare/ Explain Distinguish / Interpret/
Briefly debate/ How/ construct a graph 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

QUESTION 7
• Discuss in detail the characteristics of capital. (26)
• Examine the positive effects of capital deepening. (10)

INTRODUCTION

Capital includes all the goods that are needed to satisfy future wants including
machinery and factory buildings.
(Accept any other correct relevant introduction) (2)

BODY: MAIN PART

Characteristics of capital
Capital is owned/possessed
• It belongs to or is owned by somebody, such as a business enterprise or the
government.

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•
Producers often decide not to buy capital goods but to lease them and pay rental instead.

• The lessor then owns the capital.

Capital is consumed in the production process.

• Working capital items such as raw materials are used up during the production
process.
• During the production process of goods and services, capital goods are consumed.

• Fixed capital items such as machines are ‘consumed’ over a long period – wear and
tear.
• Businesses need to set aside some of their profits to replace worn out capital.

Capital has a limited lifespan.

• Some capital goods such as machines and equipment are subject to wear and tear.

• Their value depreciates over time.

• They may also become outdated or obsolete because of technological progress.

The formation of capital requires a sacrifice .

• The process of producing or purchasing capital goods is known as capital formation
or investment.
• Funds required for capital formation are obtained from savings.
• Savings represent current incomes that are sacrificed by economic participants.
• Most savings come from private business enterprises, with minor savings by
households and government
Capital increases production efficiency.
• Capital goods make specialisation possible.
• When more capital goods are produced in a particular period, fewer consumer
goods can be produced in the same period
• The benefit of the sacrifice is that producing capital goods will lead to a greater
production capacity.
• Modern production processes consisting of elements of human labour and machine
labour are more efficient than human labour alone.
• Efficiency results in resources being stretched much further .
• (Accept any other correct relevant response) (Max. 26)
(Allocate a maximum of 8 marks for listing of facts, headings, sub-
headings and examples.)

ADDITIONAL PART
• Capital deepening has the following positive effects:
• Productivity per worker increases as the amount of capital per worker increases.
Efficiency per worker increases.
• As productivity per worker increase, real wages also increase.

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•
• The economy will expand leading to a sustained real economic growth even without
technological process.
• Capital deepening is also thought to be a major factor – if not a prerequisite – of
economic development in emerging markets.
• It is one of the most important sources of growth in modern economies.
(Accept any correct relevant response) (10)
(Maximum of 2 marks for mere listing of facts)

CONCLUSION
The significance of capital lies in its relationship with economic growth and must
grow at a rate which is equal or higher than the increase in the workforce.
(Accept any other higher order conclusion.) (2)
[40]

QUESTION 8
• Discuss the economic importance of entrepreneurship. (26)
• Critically evaluate how the South African government promotes
entrepreneurship. (10)
INTRODUCTION
An entrepreneur is a person who takes the risk of starting and financing a new
business to satisfy the needs and wants of consumers by effectively combining the
other factors of production to make a profit.
(Any relevant introduction is accepted) max.2

BODY: MAIN PART

Importance of an entrepreneur
• Entrepreneur is found in small and large enterprise.
• Because there are so many more small enterprises, however, the contribution from
entrepreneurs in the smaller enterprises is significant.
• Throughout the world, smaller business enterprises seem to form the natural habitat
for entrepreneurs.
• Smaller businesses allow them more freedom to implement their innovations.
• In South Africa, many entrepreneurs in the informal sector start their own
microbusinesses to create their own employment.
• Many of these entrepreneurs in the informal sector are unemployed, poor people
who venture into the world of business purely to survive, often without the means,
skills and knowledge to make a success of their businesses.
• They should be recommended for providing for their own needs.
• Countries that encourage a culture of entrepreneurship, such as japan, the USA
and Europe, are characterised by economic wealth that is reflected in their
population’s high per capita income.

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•
In countries where a culture of entrepreneur is lacking, such as the former Soviet Union,
countries in Eastern Europe, Africa and even South Africa, the income per capita is much
lower.
• Successful entrepreneurs make a considerable contribution in the economy of the
community in which they operate and to the economy of the country.

Their contributions are the following:

• They satisfy the needs and wants of consumers in a community by providing the
goods and services that the community require.
• They provide employment for the citizens of a community in doing so.
• they place income in the hands of workers or consumers and help to raise the
standard of living of working people.
• They often help to reduce unemployment.
• They serve as a market for the natural resources or raw materials of the
community, so they provide income to the owners of these resources.
Responsible entrepreneurs show leadership in the responsible use of scarce
resources.
They do not produce goods or services, or discharge waste into the earth, water or
atmosphere, that would harm the environment.
Because of their high level of achievement and motivation as well as their drive to make
good profits, entrepreneurs make production a reality.
As they strive to carry out their tasks more efficiently; they help to increase productivity.
• Through all these activities, entrepreneurs make a positive contribution to the
economic growth of the community in which they operate and to the economic
growth of the country.
(Accept any other correct relevant response) Max.26

(Allocate a maximum of 8 marks for listing of facts, headings, sub-

headings and examples.)

BODY: ADDITIONAL PART

• Because of the importance of entrepreneurship in South Africa, the government
launched key institutions to support and empower South Africa’s historically
disadvantaged entrepreneurs (woman and youth in particular) to establish new
enterprises. Some of these institutions are the following:
• The small enterprise development agency (SEDA) that provides non-financial
support, such as mentoring programmes, business advice, help with government
tenders and technology support to small enterprises.
• Khula credit indemnity scheme provides access to finance through various schemes
and micro-credit in rural areas to support small businesses for the benefit of new
black entrepreneurs.
• Business partners ltd is a specialist investment group, providing customised
investment, mentoring and property-management services to SMES in South
Africa.
(Accept any other correct relevant response) (10)
(Maximum of 2 marks for mere listing of facts)

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CONCLUSION
Entrepreneurs are necessary for the economic growth of a country. Governments
appreciate and acknowledge their importance.
(Accept any other correct relevant conclusion of higher order). (2)

[40]
QUESTION 9
• Discuss the characteristics of labour. (26)
• Draw a graph that shows a fixed supply of land and briefly explain how an
increase in demand will have an effect on rent. (10)
[40]
INTRODUCTION

Labour is the use of human mental and physical effort to produce

goods and services to get a reward in the form of income. 
(Any other correct relevant introduction) Max. 2

BODY: MAIN PART

Characteristics of labour

Labour cannot be separated from worker 

• Labour is provided by people and cannot be separated from their humanity 
• The quality of people’s work is affected by their feelings. 
• General Job satisfaction, which includes fair remuneration and pleasant working
conditions, contributes to the quality and quantity of work done. 

Labour cannot be stored and hoarded 
• People cannot lock away their labour, for instance when they are young and healthy
and sell it when they are old and unproductive
• Labour ability, whether it is used or not, disappears with time 
• The labour that is lost during a strike can never be regained 
• The labour effort that you failed to put into your learning when you went to a party
the night before an exam is lost forever 

Labour varies in quality 

• The quality of the work done by identically trained people, or even the same person
at different times, can/is likely to differ 
• The more comprehensive and complicated a task, the greater the difference in the
quality of the work will be 
• The simpler and shorter a task, the less the difference will be 
• For the reason, specialisation of labour is imperative 
• Tasks are made short and simple 
• This ensures that the quality of work is consistent 

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The demand for labour is a derived demand 

• The demand for labour is a derived demand because the demand depends on the
demand for thee goods and services produced with the assistance of labour
inputs.
• The demand for labour also depends on the productivity of the workers as well as
the availability of the other factors of production.

The supply of labour depends on the size and composition of the

population as well as on migration 
• The quality of labour supplied in any country depends on the size and growth rate of
the population, the composition of the population and proportion of the population
that is able and willing to work 

Labour is fairly immovable 

• Working people are normally reluctant to move, so labour is considered to be fairly
immovable 

The supply of labour cannot be increased over a short period of time 

• The supply of labour is dependent on the given labour force of a country 
• If more workers are required in an industry, the supply of labour cannot be
increased immediately because available unemployed workers first have to be
trained

Labour is linked to human rights 

• Workers performance and employers treatment of workers in the work place are
linked to the human rights of individual workers 
• All employees have to respect these rights 
(Accept any other correct relevant response)
Max.26
(Allocate a maximum of 8 marks for listing of facts, headings, sub-
headings and examples.)

BODY: ADDITIONAL PART

Draw a graph that shows a fixed supply of land and briefly

explain how an increase in demand will have an effect on rent.

Rent for land that is fixed supply

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Rent S 
D1

D
R1 E1

Economic rent  

Re E  D1


0 Qe Quantity  

1 mark for axes 1

mark for S
2 mark for shift of DD to D1D1 1
mark for Economic rent
[ Max 4 marks]

• The supply of land is fixed (SS) and the original demand curve for land is
(DD)

• Where DD is equals SS at point E, we get the equilibrium point E and the
equilibrium price or the rental price Re, and the equilibrium quantity Qe 
• If the demand for land increases, the demand curve will shift to the right at
D1D1.
• Where D1D1 is equal to S1S1 at point E1 at the equilibrium price R1 and
equilibrium quantity Qe 
• The difference between Re and R1 is the economic rent 
(Accept any other correct relevant response) Max.6 marks

CONCLUSION
A trained, well educated workforce is essential for a country’s economic
well-being because these workers are responsible for most of the
country’s
production 

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•
(Accept any other correct relevant conclusion of higher order).
(2)
[40]
QUESTION 10

• Discuss land as one of the four factors of production with special reference to:
- Characteristics,
- Economic significance
- Remuneration.
(26)

• Examine how government can use empowerment as a strategy that the

government implement to address socio-economic inequality and
alleviate the difficulties of economically marginalised groups.
(10)
[40]

INTRODUCTION
Land comprises all naturally occurring resources whose supply is inherently
fixed.
Examples are any and all particular geographical locations, mineral deposits,
forests,
water, arable land, sunshine, fish stocks, atmospheric quality etc.
(Any relevant introduction is accepted) (2)

BODY: MAIN PART

Characteristics of land

The supply of natural resources is limited or fixed (scarce).

• That means their availability cannot be increased if we want more of
them.
• For example, if we mine all the gold there is, we cannot restore the gold
ever again.
• Land can either be renewable or non-renewable (exhaustible and
destructible)

Land is unevenly distributed.

• Some places have diamond deposits, and some have oil deposits and so
on.
• Land needs to be processed or transformed before it can have utility,
e.g.
raw diamonds have no utility, but a diamond ring has.

Natural resources are different in quality and quantity.

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•
• Some countries have a relatively vast area but the land is of limited
value.
• A desert, for example, has little or no agricultural value.
• Some countries have a relatively small geographical area but plentiful
supply of arable
land and minerals
Land is
imperishable Land is
immobile
• Land is a passive factor of production
• As a gift of nature, the initial supply price of land is zero.
• However, when used in production, it becomes scarce.
• Therefore, it fetches a price, accordingly.

Economic significance of land

• Agriculture, forestry, mining and fisheries form a significant part of the SA
economy
• Natural resources form the basis of all primary economic activities.
• They are used as raw material in the production process
• They provide opportunities for international trade, e.g. our minerals give
us the opportunity to sell to other countries that need them.
• We earn foreign currency from those exports and then use the money to
import those natural resources that we need like oil.
• Natural resources have a direct impact on the economic development of
a country.
• Economic activity is made possible by the availability of natural resources

Remuneration received for land

• The remuneration for land is economic rent.
• It should be noted that economic rent is different from commercial
rent.
• Commercial rent is rent paid for buildings, houses; land etc. whereas
economic rent is the remuneration received from the sale of a factor of
production which is scarce.

(Accept any other correct relevant response) Max.26

(Allocate a maximum of 8 marks for listing of facts, headings, sub-
headings and examples.)

BODY: ADDITIONAL PART

Empowerment

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•
• Empowerment is a management practice of sharing information, rewards,
and power with people so that they can take initiative and make decisions
to solve problems and improve service and performance.
• Empowerment is based on the idea that giving people skills, resources,
authority, opportunity, motivation, as well holding them responsible and
accountable for
outcomes of their actions, will contribute to their competence and
satisfaction.
• The following are some of the strategies that the government implement
to address socio-economic inequality and alleviate the difficulties of
economically marginalised groups;
• The Expanded Public Works Programme is the largest job-creating
initiative undertaken.
• The National Youth Agency aims to help people between the ages of 16
and
25 who want to continue their education by providing them with part-time
jobs.
• Entrepreneurship grants and skills development through 22
SETA’s.
• The Broad Based Black Empowerment Policy provides a basis for
transforming the South African economy to eradicate inequality.
• The Human Resource Development Strategy was implemented to reduce
the levels of poverty, unemployment and inequality.
• The Integrated and Sustainable Rural Development Strategy.
• Anti-poverty initiates and programmes such as a well-developed social
grants system and better service delivery to the poor.
(Accept any other correct relevant response) Max.10
(Maximum of 2 marks for mere listing of facts)

CONCLUSION
Factors of production are the corner stone of production. Natural resources are
the natural raw materials needed to produce almost anything, e.g. trees for
furniture, paper.
(Accept any other correct relevant conclusion of higher order).
(2)
[40]

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