Reference no: EM132766471

Question 1

1.1 South Africa had a command-based economic system during the years of apartheid. Consider property rights and the decision-making process and identify the changes that have taken place since the early 1990s. Give examples to illustrate the changes that you think have occurred.
Property rights are basic human rights, grounded in both ancient Abrahamic Law and current Human Rights law as found in article 17 of The Universal Declaration of Human Rights and theoretical constructs in economics for determining how a resource or economic good is used and owned.

1.2 Discuss South Africa's present economic system by answering the following questions:
1.2.1 Is South Africa's economic system now more allocatively efficient?
1.2.2 Is South Africa's economic system now closer to full production?

1.3 South Africa has a very unequal distribution of the factors of production. The practice of apartheid ensured that most of the best land is now owned by White people, as are most of the companies quoted on the Johannesburg Securities Exchange. The practice of apartheid also ensured that people classified as ‘non-White' received an inferior education. Such people now have less human capital to offer producers in the marketplace. South Africa also has a very unequal distribution of income, largely owing to the unequal distribution of resources. The unequal distribution of income causes an unequal distribution of output.
What would you suggest that the government could do to redistribute income? Consider two problems that could occur if the government put your suggestions into practice. Give reasons for your answers.

1.4 Give two examples of what the government could do to redistribute land. Consider two problems that could arise if the government put your suggestions into practice. Give reasons for your answers.

Question 2
2.1 Explain, using an example, what is meant by cross-price elasticity.
2.2 When is a supply curve most elastic in nature? Discuss why this is the case.
2.3 Compare income elasticity of demand and the cross-price elasticity of demand.

Question 3

3.1 Discuss the benefits of trade. (Use examples where necessary)
3.2 Using an appropriate example, discuss the difference between absolute and comparative advantage.