June P2 Mix
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Questions and Answers

What is the primary objective of a firm in a perfect market?

  • To minimize losses
  • To provide goods to the society
  • To control the market price
  • To maximize profit (correct)

    • What characterizes a perfectly competitive market?

  • Regulated by the government
  • Monopoly and perfect information
  • Homogeneous products and perfect information (correct)
  • Single buyer and single seller

    • What is the significance of perfect information in a perfect market?

  • It limits the mobility of factors of production
  • It prevents single entities from influencing market prices (correct)
  • It allows for price manipulation
  • It ensures the existence of a single entity

    • What is the role of individual businesses in a perfect market?

    <p>Price takers</p> Signup and view all the answers

    What is the distinction between an industry and an individual business in a perfect market?

    <p>An industry comprises multiple businesses producing identical products</p> Signup and view all the answers

    What metric do businesses in a perfect market focus on?

    <p>Various revenue metrics, including total revenue (TR), average revenue (AR), and marginal revenue (MR)</p> Signup and view all the answers

    What is the significance of marginal cost (MC) in a perfect market?

    <p>It is a pivotal concept in decision-making, especially concerning output and pricing strategies</p> Signup and view all the answers

    What is a characteristic of a perfect market?

    <p>Complete mobility of factors of production</p> Signup and view all the answers

    What is the main difference between economic growth and economic development?

    <p>Economic growth focuses on real GDP, while economic development includes standards of living and income equity</p> Signup and view all the answers

    What is the purpose of import substitution in the demand-side approach to economic growth?

    <p>To retain economic benefits within the country by producing goods domestically</p> Signup and view all the answers

    Which of the following is an example of a supply-side approach to economic growth?

    <p>Improving the quality of the labor force</p> Signup and view all the answers

    What is the main goal of the Reconstruction and Development Programme (RDP) in South Africa?

    <p>To meet basic needs and develop human resources</p> Signup and view all the answers

    What is the main characteristic of the economic divide between the North and South?

    <p>A significant disparity in income levels, economic stability, and access to resources</p> Signup and view all the answers

    What is the primary focus of the New Growth Path (NGP) in South Africa?

    <p>Job creation and identifying job drivers</p> Signup and view all the answers

    What is the purpose of Accumulating Capital Goods in the supply-side approach to economic growth?

    <p>To invest in infrastructure and technology to enhance production capacity</p> Signup and view all the answers

    What is a characteristic of a monopoly?

    <p>A single firm dominating the market with no close substitutes</p> Signup and view all the answers

    What is the primary evaluation criteria for South African approaches to economic growth?

    <p>Effectiveness in reducing poverty, inequality, and unemployment</p> Signup and view all the answers

    What is the primary goal of government regulations in imperfect markets?

    <p>To control monopolistic and oligopolistic powers and protect consumer interests</p> Signup and view all the answers

    What is a key feature of oligopolies?

    <p>Interdependence of firms</p> Signup and view all the answers

    What is the outcome of monopolistic competition in the long run?

    <p>Firms earn normal profits</p> Signup and view all the answers

    What is a consequence of imperfect markets?

    <p>Allocative and productive inefficiencies</p> Signup and view all the answers

    What is a characteristic of monopolistic competition?

    <p>Many firms selling differentiated products</p> Signup and view all the answers

    Why do monopolies maintain prices above their marginal costs?

    <p>To maintain market power and limit competition</p> Signup and view all the answers

    What is a result of oligopolies adopting a kinked demand curve?

    <p>Stabilization of prices above competitive levels</p> Signup and view all the answers

    What is a consequence of monopolies and oligopolies?

    <p>Lower output and higher prices</p> Signup and view all the answers

    What is the primary reason for the existence of monopolies?

    <p>Barriers to entry, such as patents and regulatory measures</p> Signup and view all the answers

    What is a common reason for government intervention in markets with monopolies and oligopolies?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    What is an example of a negative externality?

    <p>Pollution</p> Signup and view all the answers

    What is the primary purpose of cost-benefit analysis in public policy?

    <p>To evaluate the social costs and benefits of interventions</p> Signup and view all the answers

    What is a characteristic of public goods?

    <p>Non-excludable and non-rivalrous</p> Signup and view all the answers

    What is protectionism?

    <p>Government actions and policies that restrict or restrain international trade</p> Signup and view all the answers

    What is a consequence of imperfect competition?

    <p>Higher prices and reduced output</p> Signup and view all the answers

    What is the main argument for protecting infant industries?

    <p>To protect emerging domestic industries from foreign competition</p> Signup and view all the answers

    What is an example of asymmetric information?

    <p>Sellers knowing about defects in used cars</p> Signup and view all the answers

    What is the main benefit of free trade?

    <p>Promotes specialization and economies of scale</p> Signup and view all the answers

    What is the main goal of South Africa's export promotion policies?

    <p>To encourage local firms to export their goods</p> Signup and view all the answers

    What is a possible consequence of market failures?

    <p>Economic inequities and social divides</p> Signup and view all the answers

    What is a type of market failure?

    <p>Externalities</p> Signup and view all the answers

    What is the main focus of economic growth and development strategies?

    <p>To increase economic growth</p> Signup and view all the answers

    What is the primary challenge posed by the North/South divide?

    <p>Income inequality</p> Signup and view all the answers

    What is a possible government intervention to correct market failures?

    <p>Imposing taxes on negative externalities</p> Signup and view all the answers

    What is a type of inefficiency that occurs when resources are not allocated according to consumer preferences?

    <p>Allocative inefficiency</p> Signup and view all the answers

    What is the main difference between economic growth and development?

    <p>Economic growth focuses on quantitative measures, while development focuses on qualitative measures</p> Signup and view all the answers

    What is a possible cause of market failures?

    <p>Immobility of factors of production</p> Signup and view all the answers

    What is the main goal of South Africa's import substitution policies?

    <p>To encourage local production of goods</p> Signup and view all the answers

    What is the main benefit of economic growth?

    <p>Increases the potential for economic growth</p> Signup and view all the answers

    What occurs when the marginal cost of producing an additional unit equals the marginal revenue obtained from selling that unit?

    <p>Profits are maximized</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To enhance economic efficiency</p> Signup and view all the answers

    What characterizes imperfect markets?

    <p>Lack of perfect competition</p> Signup and view all the answers

    What is a characteristic of a monopoly?

    <p>A single company controls the entire supply</p> Signup and view all the answers

    What is true about oligopolies?

    <p>Firms produce differentiated products</p> Signup and view all the answers

    What is a key feature of monopolistic competition?

    <p>Firms produce differentiated products</p> Signup and view all the answers

    What happens to profits in monopolistically competitive markets in the long run?

    <p>Firms earn normal profits</p> Signup and view all the answers

    What influences the dynamics of imperfect markets?

    <p>Interplay of cost and revenue curves, market structure, and firm behavior</p> Signup and view all the answers

    What is the goal of firms in imperfect markets?

    <p>To maximize profits</p> Signup and view all the answers

    Why do monopolists face a downward-sloping demand curve?

    <p>Because they have significant market power</p> Signup and view all the answers

    What is the main characteristic of products in a perfectly competitive market?

    <p>Homogeneous products</p> Signup and view all the answers

    What is the primary goal of a firm in a perfect market?

    <p>Maximize profit</p> Signup and view all the answers

    What is the significance of perfect information in a perfect market?

    <p>Ensures that no single entity can wield undue influence</p> Signup and view all the answers

    What is the characteristic of individual businesses in perfectly competitive markets?

    <p>Price takers</p> Signup and view all the answers

    What is revenue metrics that businesses in a perfect market focus on?

    <p>Total revenue (TR), average revenue (AR), and marginal revenue (MR)</p> Signup and view all the answers

    What is the significance of marginal cost (MC) in decision-making?

    <p>Determining output levels</p> Signup and view all the answers

    What is the characteristic of a perfect market?

    <p>Complete mobility of factors of production</p> Signup and view all the answers

    What is the primary objective of a firm in a perfect market?

    <p>Maximize profit</p> Signup and view all the answers

    What is the primary objective of cost-benefit analysis in public policy?

    <p>To evaluate the social costs and benefits of interventions aimed at correcting market failures.</p> Signup and view all the answers

    What is the main argument for protectionism?

    <p>To protect emerging domestic industries.</p> Signup and view all the answers

    What is one of the benefits of free trade?

    <p>Increased specialization.</p> Signup and view all the answers

    What is the main goal of South Africa's import substitution policies?

    <p>To encourage local production of goods that were previously imported.</p> Signup and view all the answers

    What is a potential consequence of market failures?

    <p>All of the above.</p> Signup and view all the answers

    What is the primary focus of economic growth and development strategies?

    <p>To promote economic growth and development through sustainable income redistribution strategies.</p> Signup and view all the answers

    What is a characteristic of public goods?

    <p>They are non-rival in consumption and non-excludable.</p> Signup and view all the answers

    What is the main goal of government interventions in markets with monopolies and oligopolies?

    <p>To correct market failures and promote competition.</p> Signup and view all the answers

    What is a type of market failure?

    <p>All of the above.</p> Signup and view all the answers

    What is the primary challenge posed by the North/South divide?

    <p>Income inequality.</p> Signup and view all the answers

    What is the primary reason for government intervention in markets with monopolies and oligopolies?

    <p>To increase market transparency and reduce inefficiencies</p> Signup and view all the answers

    What is an example of a positive externality?

    <p>Education</p> Signup and view all the answers

    What is a consequence of imperfect markets?

    <p>Reduced social welfare</p> Signup and view all the answers

    What is a type of market failure?

    <p>Externalities</p> Signup and view all the answers

    What is a characteristic of public goods?

    <p>Non-excludable and non-rivalrous</p> Signup and view all the answers

    What is a cause of market failures?

    <p>Immobility of factors of production</p> Signup and view all the answers

    What is the primary goal of government intervention in imperfect markets?

    <p>To correct market failures and increase efficiency</p> Signup and view all the answers

    What is an example of asymmetric information?

    <p>Sellers knowing about defects in used cars</p> Signup and view all the answers

    What is a consequence of imperfect competition?

    <p>Higher prices and reduced output</p> Signup and view all the answers

    What is the main goal of government regulation in imperfect markets?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    What happens when the marginal revenue (MR) exceeds the marginal cost (MC) in a perfect market?

    <p>The firm should increase production to enhance profits.</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To enhance economic efficiency and prevent monopolies.</p> Signup and view all the answers

    What is a characteristic of firms in a monopolistically competitive market?

    <p>They engage in non-price competition.</p> Signup and view all the answers

    What is the result of long-term dynamics in perfect markets?

    <p>Firms make normal profits but no economic profits.</p> Signup and view all the answers

    What is a characteristic of oligopolies?

    <p>They are interdependent and may engage in collusion.</p> Signup and view all the answers

    What is the primary aim of the Redistribution of Income policy in the demand-side approach to economic growth?

    <p>To enhance consumption among lower-income earners</p> Signup and view all the answers

    What is the outcome of profit maximization in imperfect markets?

    <p>Firms maximize profits where marginal revenue equals marginal cost.</p> Signup and view all the answers

    What is a characteristic of monopolies?

    <p>They face a downward-sloping demand curve.</p> Signup and view all the answers

    Which of the following approaches focuses on improving the quality of the labor force in the supply-side approach to economic growth?

    <p>Improving the Quality of the Labor Force</p> Signup and view all the answers

    What is the significance of perfect competition in economics?

    <p>It provides a benchmark for evaluating real-world market structures.</p> Signup and view all the answers

    What is the primary goal of the Accelerated and Shared Growth Initiative of South Africa (Asgi-SA)?

    <p>To halve unemployment and poverty</p> Signup and view all the answers

    What is the human divide characterized by?

    <p>A disparity in the standard of living, as indicated by the Human Development Index (HDI)</p> Signup and view all the answers

    What is the consequence of imperfect markets on resource allocation?

    <p>Resources are allocated inefficiently.</p> Signup and view all the answers

    What is the primary goal of governments in regulating imperfect markets?

    <p>To enhance economic efficiency and prevent monopolies.</p> Signup and view all the answers

    What is the primary focus of the New Growth Path (NGP) in South Africa?

    <p>To identify job drivers like infrastructure and agriculture</p> Signup and view all the answers

    Which of the following approaches incorporates both demand-side and supply-side approaches to economic growth?

    <p>South African policies</p> Signup and view all the answers

    What is the main characteristic of the economic divide between the North and South?

    <p>All of the above</p> Signup and view all the answers

    What is the primary evaluation criterion for South African approaches to economic growth?

    <p>Their effectiveness in reducing poverty and inequality</p> Signup and view all the answers

    What is a key feature of monopolies?

    <p>Control over essential resources</p> Signup and view all the answers

    What is a consequence of monopolies and oligopolies?

    <p>Higher prices and lower output</p> Signup and view all the answers

    What is a characteristic of oligopolies?

    <p>Interdependence of firms</p> Signup and view all the answers

    What is a result of monopolistic competition?

    <p>Similar to perfect competition in the long run</p> Signup and view all the answers

    Why do governments intervene in imperfect markets?

    <p>To enhance competitive outcomes and protect consumer interests</p> Signup and view all the answers

    What is a consequence of imperfect markets?

    <p>Allocative and productive inefficiencies</p> Signup and view all the answers

    What is a characteristic of monopolistic competition?

    <p>Many firms selling differentiated products</p> Signup and view all the answers

    What is the outcome of oligopolies adopting a kinked demand curve?

    <p>Stabilization of prices above competitive levels</p> Signup and view all the answers

    What is a common reason for government intervention in imperfect markets?

    <p>To protect consumer interests and promote competition</p> Signup and view all the answers

    What is the primary focus of understanding imperfect markets?

    <p>To understand the dynamics of real-world markets</p> Signup and view all the answers

    What is the primary consequence of market failures?

    <p>Net social welfare loss</p> Signup and view all the answers

    What is an example of a positive externality?

    <p>Education</p> Signup and view all the answers

    What is the primary cause of allocative inefficiency?

    <p>Imperfect competition</p> Signup and view all the answers

    What is the role of government intervention in markets with monopolies and oligopolies?

    <p>To increase market transparency and consumer information</p> Signup and view all the answers

    What is the primary consequence of asymmetric information?

    <p>Choices that do not maximize welfare</p> Signup and view all the answers

    What is an example of a merit good?

    <p>Health care</p> Signup and view all the answers

    What is the primary characteristic of public goods?

    <p>Non-excludable and non-rivalrous</p> Signup and view all the answers

    What is the primary cause of productive inefficiency?

    <p>Not using resources to their full potential</p> Signup and view all the answers

    What is the primary goal of government intervention in markets with externalities?

    <p>To correct market failures</p> Signup and view all the answers

    What is the primary consequence of market failures on income and wealth distribution?

    <p>Imperfect distribution of income and wealth</p> Signup and view all the answers

    What is the primary driver of firm entry and exit in perfectly competitive markets?

    <p>Profitability</p> Signup and view all the answers

    What is the characteristic of a monopolist's demand curve?

    <p>Downward-sloping</p> Signup and view all the answers

    What is a key characteristic of products in a perfectly competitive market?

    <p>They are homogeneous with little to no differentiation.</p> Signup and view all the answers

    What is the primary goal of governments in promoting perfect competition?

    <p>To enhance economic efficiency</p> Signup and view all the answers

    What is the characteristic of oligopolies in terms of revenue and cost curves?

    <p>The demand curve exhibits a kinked shape</p> Signup and view all the answers

    What is the primary goal of a firm in a perfect market?

    <p>To maximize profit.</p> Signup and view all the answers

    What is the significance of freedom of entry and exit in a perfectly competitive market?

    <p>It prevents firms from influencing market prices.</p> Signup and view all the answers

    What is the outcome of monopolistic competition in the long run?

    <p>Firms normalize their profits</p> Signup and view all the answers

    What is the role of individual businesses in a perfectly competitive market?

    <p>They are price takers.</p> Signup and view all the answers

    What is the primary characteristic of imperfect markets?

    <p>Lack of perfect competition</p> Signup and view all the answers

    What is the primary goal of firms in imperfect markets?

    <p>To maximize economic profits</p> Signup and view all the answers

    What is the significance of total revenue (TR) in a perfectly competitive market?

    <p>It is the total income earned from sales.</p> Signup and view all the answers

    What is the significance of average cost (AC) in a perfectly competitive market?

    <p>It is the cost per unit of production.</p> Signup and view all the answers

    What is the primary consequence of imperfect markets?

    <p>Market inefficiency</p> Signup and view all the answers

    What is the primary characteristic of a monopolistically competitive market?

    <p>Many firms sell differentiated products</p> Signup and view all the answers

    What is the significance of marginal revenue (MR) in a perfectly competitive market?

    <p>It is the revenue earned from selling one additional unit.</p> Signup and view all the answers

    What is the primary role of competition policies in imperfect markets?

    <p>To enhance economic efficiency</p> Signup and view all the answers

    What is the significance of marginal cost (MC) in a perfectly competitive market?

    <p>It is the cost of producing one additional unit.</p> Signup and view all the answers

    Which type of market structure is characterized by a single firm dominating the entire market?

    <p>Monopoly</p> Signup and view all the answers

    What is a consequence of imperfect markets?

    <p>Allocative and productive inefficiencies</p> Signup and view all the answers

    What is a key feature of oligopolies?

    <p>Firms are interdependent in their decision-making</p> Signup and view all the answers

    What is the outcome of monopolistic competition in the long run?

    <p>Firms earning just normal profits</p> Signup and view all the answers

    Why do governments intervene in imperfect markets?

    <p>To enhance competitive outcomes and protect consumer interests</p> Signup and view all the answers

    What is a characteristic of monopolistic competition?

    <p>Firms selling differentiated products</p> Signup and view all the answers

    What is a consequence of monopolies and oligopolies?

    <p>Higher prices and lower output</p> Signup and view all the answers

    What is the primary goal of governments in regulating imperfect markets?

    <p>To protect consumer interests and enhance competitive outcomes</p> Signup and view all the answers

    What is a characteristic of oligopolies?

    <p>Firms adopting a kinked demand curve</p> Signup and view all the answers

    What is the primary reason for government intervention in imperfect markets?

    <p>To correct market failures and promote efficient outcomes</p> Signup and view all the answers

    What is the primary focus of the demand-side approach to economic growth?

    <p>Increasing government expenditure and redistribution of income</p> Signup and view all the answers

    Which of the following is a characteristic of economic development?

    <p>Encompasses improvements in standards of living and income equity</p> Signup and view all the answers

    What is the primary goal of the Accelerated and Shared Growth Initiative of South Africa (Asgi-SA)?

    <p>Reducing unemployment and poverty</p> Signup and view all the answers

    What is the Human Development Index (HDI) used to measure?

    <p>Standard of living, health, education, and income</p> Signup and view all the answers

    What is the main difference between the North and South in terms of economic development?

    <p>Income levels and access to resources</p> Signup and view all the answers

    What is the primary evaluation criteria for South African approaches to economic growth?

    <p>Their effectiveness in reducing poverty, inequality, and unemployment</p> Signup and view all the answers

    What is the primary purpose of cost-benefit analysis in public policy?

    <p>To evaluate the social costs and benefits of a project</p> Signup and view all the answers

    What is the main goal of South Africa's Reconstruction and Development Programme (RDP)?

    <p>Meeting basic needs and developing human resources</p> Signup and view all the answers

    What is the primary goal of South Africa's export promotion policies?

    <p>To encourage local firms to export goods and increase participation in the global market</p> Signup and view all the answers

    What is the primary focus of the supply-side approach to economic growth?

    <p>Improving the quality of the labor force and managing natural resources</p> Signup and view all the answers

    What is a common argument for protecting infant industries?

    <p>To safeguard jobs against cheaper imported goods</p> Signup and view all the answers

    What is the primary benefit of free trade?

    <p>It promotes specialization and economies of scale</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To correct market failures and ensure efficient allocation of resources</p> Signup and view all the answers

    What is the primary challenge posed by the North/South divide?

    <p>Income inequality between developed and developing countries</p> Signup and view all the answers

    What is the primary goal of South Africa's import substitution policies?

    <p>To encourage local production of goods that were previously imported</p> Signup and view all the answers

    What is the primary consequence of market failures?

    <p>Inefficient allocation of resources</p> Signup and view all the answers

    What is the primary focus of economic growth and development strategies?

    <p>To encourage economic growth and development through sustainable income redistribution</p> Signup and view all the answers

    What is a possible consequence of imperfect competition?

    <p>Inefficient allocation of resources</p> Signup and view all the answers

    In a perfect market, what is the result of the lack of differentiation between goods sold by different sellers?

    <p>No single entity can wield undue influence over the market</p> Signup and view all the answers

    What is the primary distinction between an industry and an individual business in a perfect market?

    <p>An industry is a collection of businesses, while an individual business is a single entity</p> Signup and view all the answers

    What is the purpose of marginal revenue (MR) in decision-making for businesses in a perfect market?

    <p>To determine the optimal output level of a firm</p> Signup and view all the answers

    What is the significance of complete mobility of factors of production in a perfect market?

    <p>It ensures that resources are allocated efficiently</p> Signup and view all the answers

    What is the relationship between the market price and the output level of individual businesses in a perfect market?

    <p>Individual businesses can only control their output levels</p> Signup and view all the answers

    What is the primary goal of businesses in a perfect market?

    <p>To maximize profits</p> Signup and view all the answers

    What is the significance of homogeneous products in a perfect market?

    <p>It ensures that no single entity can wield undue influence over the market</p> Signup and view all the answers

    What is the result of freedom of entry and exit in a perfect market?

    <p>It ensures that resources are allocated efficiently</p> Signup and view all the answers

    What is the primary focus of the demand-side approach to economic growth?

    <p>Increasing government expenditure and redistribution of income</p> Signup and view all the answers

    Which of the following is NOT a characteristic of the economic divide between the North and South?

    <p>Similar access to resources</p> Signup and view all the answers

    What is the primary goal of the Accelerated and Shared Growth Initiative of South Africa (Asgi-SA)?

    <p>Halving unemployment and poverty</p> Signup and view all the answers

    What is the primary evaluation criterion for South African approaches to economic growth?

    <p>Effectiveness in reducing poverty and inequality</p> Signup and view all the answers

    What is the primary focus of the supply-side approach to economic growth?

    <p>Improving the quality of the labor force and managing natural resources</p> Signup and view all the answers

    What is the primary goal of the Reconstruction and Development Programme (RDP) in South Africa?

    <p>Meeting basic needs and developing human resources</p> Signup and view all the answers

    What is the primary characteristic of South African policies on economic growth?

    <p>Incorporation of both demand-side and supply-side approaches</p> Signup and view all the answers

    What is the primary difference between economic growth and economic development?

    <p>Economic growth refers to an increase in real GDP, while economic development encompasses improvements in standards of living</p> Signup and view all the answers

    What is the primary consequence of imperfect markets?

    <p>Allocative and productive inefficiencies</p> Signup and view all the answers

    What is the primary characteristic of a monopoly?

    <p>A single firm dominating the market</p> Signup and view all the answers

    What is the primary goal of government regulations in imperfect markets?

    <p>To control monopolistic and oligopolistic powers</p> Signup and view all the answers

    What is the primary feature of oligopolies?

    <p>Interdependence of firms</p> Signup and view all the answers

    What occurs in monopolistic competition?

    <p>Firms have some control over prices due to product differentiation</p> Signup and view all the answers

    What is the primary goal of firms in imperfect markets?

    <p>To maximize economic profits in the long run</p> Signup and view all the answers

    What is the result of the interplay of cost and revenue curves in imperfect markets?

    <p>Firms maximize profits where marginal revenue equals marginal cost</p> Signup and view all the answers

    What is the outcome of monopolies and oligopolies?

    <p>Higher prices and lower output</p> Signup and view all the answers

    What is the primary purpose of cost-benefit analysis in public policy?

    <p>To evaluate the social costs and benefits of government interventions</p> Signup and view all the answers

    Why do monopolies and oligopolies generate sustained profits?

    <p>Due to barriers to entry</p> Signup and view all the answers

    What is the main argument for protectionism?

    <p>To safeguard jobs and preserve local industries</p> Signup and view all the answers

    What is the primary reason for government intervention in markets with monopolies and oligopolies?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    What is the primary reason for the existence of imperfect markets?

    <p>Lack of perfect competition due to barriers to entry</p> Signup and view all the answers

    What is the primary consequence of imperfect competition?

    <p>Allocative and productive inefficiencies</p> Signup and view all the answers

    What is a characteristic of oligopolies?

    <p>A few firms dominate a market, often leading to non-price competition</p> Signup and view all the answers

    What is a benefit of free trade?

    <p>Enhanced consumer choice and improved international relations</p> Signup and view all the answers

    What is an example of a positive externality?

    <p>Education</p> Signup and view all the answers

    What is the outcome of monopolistic competition in the long run?

    <p>Firms normalize their profits, similar to perfect competition</p> Signup and view all the answers

    What is the primary goal of South Africa's export promotion policies?

    <p>To increase participation in the global market and promote economic growth</p> Signup and view all the answers

    What is a characteristic of public goods?

    <p>They are non-excludable and non-rivalrous</p> Signup and view all the answers

    What is the primary goal of understanding imperfect markets?

    <p>To understand the dynamics of real-world markets</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To dismantle barriers to entry and ensure a level playing field</p> Signup and view all the answers

    What can lead to redundant expenditures on advertising and marketing in monopolistic competition?

    <p>Non-price competition</p> Signup and view all the answers

    What is the consequence of imperfect distribution of income and wealth?

    <p>It prevents market economies from being efficient</p> Signup and view all the answers

    What is a characteristic of imperfect markets?

    <p>Government intervention and imperfect information</p> Signup and view all the answers

    What is a characteristic of monopolistic competition?

    <p>Many firms sell products that are differentiated but serve a similar purpose</p> Signup and view all the answers

    What is the main goal of economic growth and development strategies?

    <p>To encourage economic growth and development through efficient allocation of resources</p> Signup and view all the answers

    What is an example of a merit good?

    <p>Health care</p> Signup and view all the answers

    What is the consequence of asymmetric information?

    <p>It leads to choices that do not maximize welfare</p> Signup and view all the answers

    What is the consequence of imperfect markets?

    <p>Market inefficiencies occur, leading to a misallocation of resources</p> Signup and view all the answers

    What is a consequence of market failures?

    <p>Inefficiency and misallocation of resources</p> Signup and view all the answers

    What is the primary focus of governments in regulating imperfect markets?

    <p>To prevent market failures and ensure a level playing field</p> Signup and view all the answers

    What is the primary challenge posed by the North/South divide?

    <p>Income inequality and unequal distribution of resources</p> Signup and view all the answers

    What is the primary goal of government intervention in markets with externalities?

    <p>To correct market failures</p> Signup and view all the answers

    What is a consequence of immobility of factors of production?

    <p>It leads to inefficiencies in the production of goods and services</p> Signup and view all the answers

    What is the result of the dynamic equilibrium in perfect markets?

    <p>Resources are allocated most efficiently, reflecting the virtues of perfect competition</p> Signup and view all the answers

    What is a possible government intervention to correct market failures?

    <p>Implementing cost-benefit analysis and designing interventions</p> Signup and view all the answers

    What is the primary goal of government intervention in markets with imperfect competition?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    What is the main difference between economic growth and economic development?

    <p>Economic growth focuses on increasing GDP, while economic development focuses on improving living standards</p> Signup and view all the answers

    What is a characteristic of market failures?

    <p>They lead to a net social welfare loss</p> Signup and view all the answers

    In a perfectly competitive market, what happens when the marginal cost of producing an additional unit equals the marginal revenue obtained from selling that unit?

    <p>Firms achieve maximum profits.</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To emulate the conditions of perfect competition</p> Signup and view all the answers

    In a monopolistically competitive market, what happens to economic profits in the long run?

    <p>Economic profits tend to normalize due to ease of entry.</p> Signup and view all the answers

    What is a characteristic of oligopolies?

    <p>Firms engage in non-price competition.</p> Signup and view all the answers

    What is a consequence of imperfect markets?

    <p>Markets are characterized by market inefficiencies.</p> Signup and view all the answers

    In a monopoly, what allows the monopolist to act as a price setter?

    <p>Patents and resource control.</p> Signup and view all the answers

    What is a key feature of monopolistic competition?

    <p>Firms engage in non-price competition and differentiate their products.</p> Signup and view all the answers

    What is the primary objective of firms in imperfect markets?

    <p>To achieve maximum profits.</p> Signup and view all the answers

    What is a characteristic of perfect competition?

    <p>Resources are allocated efficiently.</p> Signup and view all the answers

    What is the dynamic equilibrium in perfect markets?

    <p>Firms make normal profits, but no economic profits, in the long run.</p> Signup and view all the answers

    In a perfectly competitive market, what is the primary reason why individual businesses cannot influence market prices?

    <p>Because they are too small relative to the size of the market</p> Signup and view all the answers

    What is the primary benefit of homogeneous products in a perfectly competitive market?

    <p>It ensures that no single entity can wield undue influence over the market</p> Signup and view all the answers

    What is the primary objective of a firm in a perfectly competitive market when deciding on output levels?

    <p>To maximize profit by producing at a level where marginal cost equals marginal revenue</p> Signup and view all the answers

    What is the primary difference between an industry and an individual business in a perfectly competitive market?

    <p>An industry is the sum of individual businesses' outputs, while an individual business is a part of the industry</p> Signup and view all the answers

    What is the primary reason why governments do not regulate perfectly competitive markets?

    <p>Because the government believes that the market is efficient and self-regulating</p> Signup and view all the answers

    What is the primary significance of average revenue in a perfectly competitive market?

    <p>It is the revenue earned by a firm from selling a single unit of a product</p> Signup and view all the answers

    What is the primary reason why imperfect markets result in allocative and productive inefficiencies?

    <p>The price of the product is not equal to its marginal cost.</p> Signup and view all the answers

    What is the primary consequence of freedom of entry and exit in a perfectly competitive market?

    <p>It ensures that no single entity can wield undue influence over the market</p> Signup and view all the answers

    How do monopolies and oligopolies maintain their market power?

    <p>Through barriers to entry and control over essential resources.</p> Signup and view all the answers

    What is the primary difference between total revenue and marginal revenue in a perfectly competitive market?

    <p>Total revenue is the revenue earned from selling multiple units, while marginal revenue is the revenue earned from selling one additional unit</p> Signup and view all the answers

    What is the primary difference between monopolies and oligopolies?

    <p>The number of firms in the market.</p> Signup and view all the answers

    What is the primary reason why firms in monopolistic competition earn only normal profits in the long run?

    <p>Ease of market entry.</p> Signup and view all the answers

    What is the primary consequence of imperfect markets on economic welfare?

    <p>Welfare losses to society.</p> Signup and view all the answers

    What is the primary goal of government regulations in imperfect markets?

    <p>To enhance competitive outcomes and protect consumer interests.</p> Signup and view all the answers

    What is the primary characteristic of an oligopoly?

    <p>Firms are interdependent and make decisions based on each other's actions.</p> Signup and view all the answers

    What is the primary difference between monopolistic competition and perfect competition?

    <p>The level of product differentiation.</p> Signup and view all the answers

    What is the primary consequence of monopolies and oligopolies on market prices?

    <p>Prices are higher than marginal cost.</p> Signup and view all the answers

    What is the primary reason why imperfect markets are more realistic than perfect competition?

    <p>They are more common in real-world markets.</p> Signup and view all the answers

    Which of the following approaches focuses on improving the quality of the labor force to enhance productivity?

    <p>Supply-side Approach</p> Signup and view all the answers

    What is the primary goal of the Growth, Employment and Redistribution (GEAR) policy in South Africa?

    <p>Market-led growth and fiscal discipline</p> Signup and view all the answers

    Which of the following best describes the Human Development Index (HDI)?

    <p>A measure of health, education, and income</p> Signup and view all the answers

    What is the primary focus of the Accelerated and Shared Growth Initiative of South Africa (Asgi-SA)?

    <p>Halving unemployment and poverty</p> Signup and view all the answers

    What is the primary reason for government intervention in markets with monopolies and oligopolies?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    Which of the following approaches does not focus on stimulating economic activity through government expenditure?

    <p>Supply-side Approach</p> Signup and view all the answers

    Which of the following market failures is characterized by the underproduction of goods and services in private markets?

    <p>Public Goods</p> Signup and view all the answers

    What is the consequence of imperfect distribution of income and wealth in a market economy?

    <p>Underproduction of basic goods and services</p> Signup and view all the answers

    What is the primary characteristic of the economic divide between the North and South?

    <p>A significant disparity in income levels</p> Signup and view all the answers

    What is the primary goal of government intervention in correcting market failures?

    <p>To promote social welfare</p> Signup and view all the answers

    Which of the following policies is not a supply-side approach to economic growth?

    <p>Redistributing income</p> Signup and view all the answers

    Which of the following is an example of a positive externality?

    <p>Education</p> Signup and view all the answers

    What is the primary evaluation criterion for South African approaches to economic growth?

    <p>Effectiveness in reducing poverty and inequality</p> Signup and view all the answers

    What is the consequence of asymmetric information in markets?

    <p>Reduced consumer welfare</p> Signup and view all the answers

    What is the primary consequence of imperfect competition in markets?

    <p>Allocative inefficiency</p> Signup and view all the answers

    What is the primary goal of government regulations in markets with externalities?

    <p>To protect the environment</p> Signup and view all the answers

    Which of the following is a consequence of market failures in terms of economic efficiency?

    <p>Productive inefficiency</p> Signup and view all the answers

    What is the primary goal of government intervention in markets with public goods?

    <p>To provide public goods directly</p> Signup and view all the answers

    What is the primary purpose of conducting a cost-benefit analysis in public policy?

    <p>To evaluate the social costs and benefits of interventions aimed at correcting market failures</p> Signup and view all the answers

    Which of the following is a characteristic of protectionism?

    <p>Restricting international trade to protect local businesses and jobs</p> Signup and view all the answers

    What is the primary benefit of free trade, according to the concept of specialization?

    <p>Focusing on the production of goods for which a nation has a comparative advantage</p> Signup and view all the answers

    Which of the following is an argument for free trade?

    <p>Access to a wider variety of goods and services at lower prices</p> Signup and view all the answers

    What is the primary goal of South Africa's export promotion policies?

    <p>To increase participation in the global market and promote economic growth</p> Signup and view all the answers

    What is a common challenge posed by the North/South divide?

    <p>Income inequality between nations</p> Signup and view all the answers

    Which of the following is a possible consequence of market failures?

    <p>Inefficient allocation of resources</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To correct market failures and ensure efficient allocation of resources</p> Signup and view all the answers

    What is a characteristic of imperfect markets?

    <p>Existence of externalities and information asymmetry</p> Signup and view all the answers

    What is the primary focus of economic growth and development strategies?

    <p>Fostering economic growth and development through sustainable income redistribution</p> Signup and view all the answers

    In a perfectly competitive market, what is the primary reason why individual businesses are price takers?

    <p>The numerous buyers and sellers make it impossible for individual entities to influence market prices.</p> Signup and view all the answers

    What is the significance of perfect information in a perfect market?

    <p>It ensures that buyers and sellers have access to all relevant market information, preventing any single entity from wielding undue influence.</p> Signup and view all the answers

    What is the distinction between average revenue and marginal revenue in a perfectly competitive market?

    <p>Average revenue refers to the total revenue earned by a firm, while marginal revenue is the additional revenue earned from selling one more unit.</p> Signup and view all the answers

    What is the significance of marginal cost in the decision-making process of a firm in a perfect market?

    <p>It determines the optimal level of production and the selling price of the product.</p> Signup and view all the answers

    What is the primary objective of a firm in a perfect market?

    <p>To maximize profits</p> Signup and view all the answers

    In a perfect market, what is the relationship between the demand curve of an individual firm and the market demand curve?

    <p>The demand curve of an individual firm is horizontal, while the market demand curve is downward sloping.</p> Signup and view all the answers

    What is the significance of the concept of total revenue in a perfect market?

    <p>It refers to the revenue earned by the firm from selling all units.</p> Signup and view all the answers

    What is the relationship between the output level and the marginal revenue of a firm in a perfect market?

    <p>As output increases, marginal revenue decreases.</p> Signup and view all the answers

    What is a key feature of imperfect markets that distinguishes them from perfect competition?

    <p>Firms can influence market prices.</p> Signup and view all the answers

    What is a consequence of imperfect markets?

    <p>Higher prices and lower output</p> Signup and view all the answers

    What is a characteristic of monopolistic competition?

    <p>Firms have some control over prices due to product differentiation.</p> Signup and view all the answers

    Why do oligopolies often adopt a kinked demand curve?

    <p>To discourage competitive price changes</p> Signup and view all the answers

    What is the primary reason for government intervention in imperfect markets?

    <p>To protect consumer interests</p> Signup and view all the answers

    What is a consequence of underutilization of resources in imperfect markets?

    <p>Allocative and productive inefficiencies</p> Signup and view all the answers

    What is a characteristic of monopolies?

    <p>A single firm dominates the entire market.</p> Signup and view all the answers

    What is the outcome of imperfect competition in the long run?

    <p>Firms earn normal profits.</p> Signup and view all the answers

    What is the primary goal of government regulations in imperfect markets?

    <p>To protect consumer interests</p> Signup and view all the answers

    What is a consequence of market power in imperfect markets?

    <p>Higher prices and lower output</p> Signup and view all the answers

    What is the primary purpose of cost-benefit analysis in public policy?

    <p>To evaluate the social costs and benefits of interventions aimed at correcting market failures</p> Signup and view all the answers

    What is the main argument for protecting infant industries?

    <p>To protect emerging domestic industries that are not yet competitive enough to withstand international competition</p> Signup and view all the answers

    What is the primary goal of South Africa's export promotion policies?

    <p>To encourage local firms to export their goods, thereby increasing participation in the global market</p> Signup and view all the answers

    What is the main characteristic of public goods?

    <p>They are non-excludable and non-rivalrous</p> Signup and view all the answers

    What is the primary benefit of free trade?

    <p>It increases the potential for economic growth through expanded markets and investment opportunities</p> Signup and view all the answers

    What is the primary challenge posed by the North/South divide?

    <p>Income inequality</p> Signup and view all the answers

    What is the primary goal of government regulations in imperfect markets?

    <p>To correct market failures</p> Signup and view all the answers

    What is the main consequence of monopolies and oligopolies?

    <p>Inefficient allocation of resources</p> Signup and view all the answers

    What is the primary focus of economic growth and development strategies?

    <p>To address income inequality and promote sustainable development</p> Signup and view all the answers

    What is the primary goal of South Africa's import substitution policies?

    <p>To encourage local production of goods that were previously imported to strengthen domestic industries and reduce dependency on foreign goods</p> Signup and view all the answers

    What is the main difference between economic growth and economic development?

    <p>Economic growth refers to an increase in real GDP, while economic development includes improvements in standards of living.</p> Signup and view all the answers

    Which approach to economic growth focuses on increasing government expenditure and income redistribution?

    <p>Demand-side approach</p> Signup and view all the answers

    What is the primary goal of the Accelerated and Shared Growth Initiative of South Africa (Asgi-SA)?

    <p>To reduce poverty and unemployment by half</p> Signup and view all the answers

    What is the main characteristic of the economic divide between the North and South?

    <p>A significant disparity in income levels and access to resources</p> Signup and view all the answers

    What is the primary focus of the Reconstruction and Development Programme (RDP) in South Africa?

    <p>To focus on meeting basic needs, developing human resources, and building the economy</p> Signup and view all the answers

    What is the primary goal of the supply-side approach to economic growth?

    <p>To improve the quality of the labor force, manage natural resources, and invest in infrastructure and technology</p> Signup and view all the answers

    What is the primary evaluation criterion for South African approaches to economic growth?

    <p>Effectiveness in reducing poverty, inequality, and unemployment</p> Signup and view all the answers

    What is the primary focus of the New Growth Path (NGP) in South Africa?

    <p>To identify job drivers like infrastructure and agriculture</p> Signup and view all the answers

    What is the primary reason for government intervention in markets with monopolies and oligopolies?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    What is a characteristic of public goods?

    <p>They are non-excludable and non-rivalrous</p> Signup and view all the answers

    What is an example of a negative externality?

    <p>Pollution</p> Signup and view all the answers

    What is a consequence of imperfect competition?

    <p>Increased prices and reduced output</p> Signup and view all the answers

    What is a type of market failure?

    <p>All of the above</p> Signup and view all the answers

    What is a consequence of asymmetric information?

    <p>Decreased market efficiency</p> Signup and view all the answers

    What is a possible government intervention to correct market failures?

    <p>Providing subsidies for positive externalities</p> Signup and view all the answers

    What is a characteristic of imperfect markets?

    <p>Presence of externalities and public goods</p> Signup and view all the answers

    What is a consequence of market failures?

    <p>Inefficient allocation of resources</p> Signup and view all the answers

    What is the primary goal of government regulation in imperfect markets?

    <p>To increase market competition and reduce inefficiencies</p> Signup and view all the answers

    What is the primary mechanism that ensures resources are allocated most efficiently in perfect markets?

    <p>Long-term dynamics of perfect markets</p> Signup and view all the answers

    What is the primary goal of governments in designing competition policies?

    <p>To emulate the conditions of perfect competition</p> Signup and view all the answers

    What is a characteristic of monopolies in terms of revenue and cost curves?

    <p>Their marginal revenue curve lies below their demand curve</p> Signup and view all the answers

    What is the primary difference between oligopolies and monopolistic competition?

    <p>Level of product differentiation</p> Signup and view all the answers

    What is the outcome of monopolistic competition in the long run?

    <p>Firms normalize profits similar to perfect competition</p> Signup and view all the answers

    What is the primary consequence of imperfect markets?

    <p>Market inefficiencies</p> Signup and view all the answers

    What is the primary reason for government intervention in markets with monopolies and oligopolies?

    <p>To protect consumer interests</p> Signup and view all the answers

    What is the primary goal of a firm in imperfect markets?

    <p>To maximize profits</p> Signup and view all the answers

    What is the primary characteristic of a kinked demand curve in oligopolies?

    <p>It has a kink at the current price point</p> Signup and view all the answers

    What is the primary reason for the existence of monopolies?

    <p>Barriers to entry</p> Signup and view all the answers

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