Discuss what opportunity cost is and give an example of an economic problem involving opportunity cost that the South African government is currently facing. QUESTION 3 (6 marks) South Africa is endowed with factors of production.

Discuss how labour and natural resources can be used to improve the economy of South Africa post Covid-19 era. QUESTION 4 (9 marks) South Africa is known as one of the most unequal countries in the world, reporting a per-capita expenditure Gini coefficient of 0,67 in 2006, dropping to 0,65 in 2015. This is according to the Inequality Trends in South Africa report released by Stats SA. According to the Palma ratio, the top 10% of the population spent 8,6 times more than the bottom 40% in 2006; this ratio reduced to 7,9 in 2015. These figures indicate that overall inequality, measured at a national level, has declined between 2006 and 2015.

4.1 Discuss what you understand by a Gini-coefficient of 0.65? (3)

4.2 Discuss reasons that may have caused the decline of overall inequality between 2006 and 2015?