Reference no: EM133167554

Question 1

The National Youth Development Agency in South Africa launched a fund for youth owned businesses that were affected by the civil unrest that took place in the Kwa Zulu Natal and Gauteng provinces in July and August 2021.

a) According to economic theory, what type of fund is this? Discuss, by using supply and demand curves 

b) Suppose you own one of these businesses. What pricing decisions will you make regarding your products after receiving the fund? What will you base these pricing decisions on? Use diagrams to support your answers 

c) What impact will this fund have on your output. Use the PPF curve to illustrate 

Question 2

Eskom is South Africa's energy producer. An empirical study was conducted by Nkosi (2020) on the relationship between state-owned enterprises and government debt. Using a Vector Autoregressive (VAR) model, the study found that 29.51% of Eskom's revenue is from increases in the electricity price.

a) Discuss why Eskom can generate its revenue in this way. Make references to microeconomic theory and market structure. Also, use diagrams in your discussions.

b) What recommendations can you make about the market structure for Eskom's revenue to be less dependent on price increases?

Question 3

a) Use the criteria for evaluating alternative methods of government finance to assess the three most important revenue proposals of the 2022/23 budget.

b) As a team leader at the National Treasury's Budget Office, what would you have proposed differently?