Grade 10 Economics Exam
Paper 2
November 2011
Time: 90 Minutes
Marks: 40
INSTRUCTIONS
1.
Answer TWO questions as follows:
SECTION A: Data Response
COMPULSORY QUESTION
Brief answers only are required.
(+/- 45 minutes)
SECTION B: Long answer questions
ANSWER ONE QUESTION (THREE OPTIONS)
(+/- 45 minutes)
2.
You may answer with reference to the South African economy or other economies
that you have studied where relevant to the question.
3.
Write the number of the question next to each answer.
4.
Number the answers according to the system used in this question paper.
5.
Start each SECTION on a NEW PAGE. Leave one to two lines open between subsections of each question.
6.
Read each question carefully.
7.
A neat and systematic presentation of facts is required.
8.
Answer in full sentences.
9.
Do not answer more than the required number of questions. Only the required
number of questions, in the order in which they have been handed in, will be
marked.
10.
Use only a black or blue pen (graphs / diagrams may be done in pencil).
11.
Non – programmable pocket calculators may be used.
THIS QUESTION PAPER CONSISTS OF 3 PAGES
SECTION A: Answer this question.
Study the following information and answer the questions that follow:
1. Economic Aspects of Cigarette Smoking
Smoking cigarettes is a controversial matter that illustrates a number of economic issues.
As with most products, the key influence on the level of consumption is the product’s price.
United States:
Malaysia:
A study of cigarette smoking in Malaysia estimated the short-run and long-run price
elasticity of demand (PED) and the income elasticity of demand (YED) for cigarettes
between 1990 and 2004.
The results are shown in Table 1.
Europe:
In Europe, taxation of cigarettes is particularly heavy. In 2006 it was 76.4% of the final
selling price in Germany, 77.1% in the UK and 80.4% in France. European countries are
increasingly banning smoking in enclosed public areas and workplaces. Some antismoking campaigners are calling for the smoking of cigarettes anywhere to be made
illegal.
Grade 10 Economics (Paper 2): November 2011
2
1.1.
How far does the data in Fig. 1 confirm that the normal demand curve relationship
exists between the price and the quantity demanded of cigarettes?
[3]
1.2.
What do the three elasticity values in Table 1 tell us about the elasticity of demand
for cigarettes?
[3]
1.3.
What might explain these different elasticity values?
[4]
1.4.
Explain two possible economic reasons why cigarettes are heavily taxed.
[4]
1.5.
Discuss the possible economic consequences of making cigarette smoking illegal.
[6]
SECTION B: Answer ONE of the following three questions
Start the question on a NEW and SEPARATE page.
1.1.
Explain, with the aid of a diagram, how consumer surplus will be affected by the
introduction of an indirect tax.
[8]
1.2.
Discuss the advantages and disadvantages of using indirect taxes to deal with the
negative externalities associated with some products.
[12]
2.1.
Explain, with the aid of a diagram, the impact on the labour market of the imposition
of an effective minimum wage.
[8]
2.2.
Discuss the polices that a government might use to try to combat structural
unemployment.
[12]
3.1.
Explain, with examples, the significance of the value of a good’s cross-elasticity of
demand in relation to its substitutes and complements.
[8]
3.2.
Discuss whether the demand for mobile phones (cell phones) is likely to be priceelastic or price-inelastic.
[12]
Grade 10 Economics (Paper 2): November 2011
3