Scenario 1

Due to the impact of COVID19, the market systems may not allocate resources efficiently for many reasons. This is known as market failure. Governments intervene to correct such market failures. The imposition of price controls is one such intervention. Using relevant diagrams, discuss the use of:

1. Maximum prices, and
2. Minimum price controls in the markets and their consequences
3. Assume that the government withdraws a subsidy from a South African industry. Discuss the impact of this withdrawal on the market for two products, one which is relatively elastic and another whose demand is relatively inelastic.

Scenario 2

In a market for motor vehicles, Company X is the sole producer and is a profit maximizer. Discuss what type of company this is, its market structure, and what this means for its pricing decisions. How does its behaviour differ from dominant market structures?

Scenario 3

Given the impact of Covid-19 on the global economy, the South African Reserve Bank (SARB) has taken a specific stance on changes to the interest rates since the end of 2019.Explain the effect of a decrease in the repurchase rate through the "monetary policy transmission mechanism". Discuss at least 3 transmission channels.

Scenario 4

Fluctuations of a currency like the South Africa Rand affect the economy's performance through the level of investments/disinvestments in specific sectors. Drawing examples from specific sectors, use the AD-AS model to discuss currency fluctuations' impact on the economy or the country. Substantiate fully!

Scenario 5

Eskom is South Africa's monopoly power producer, which the majority of South Africans depend on. Suppose there is an introduction of another power producer and Eskom increases its electricity price. What is the impact on the demand for alternative power? Use the relevant diagrams.

Scenario 6

Macroeconomic policies have different effects on the price level and output (national income). Discuss how monetary policy instruments can be used to slow down inflation and grow the economy of a country.