ECONOMICS · GRADE 11

Cover: MARKS: 150. TIME: 2 hours. Non-programmable pocket calculator permitted. Black or blue ink only.

Instructions: Answer FOUR questions. Answers in excess of the required number will not be marked. Answer in full sentences. Number your answers exactly as the questions are numbered. Write the question number above each answer. Start EACH question on a NEW page. Leave two to three lines between subsections.

SECTION A: QUESTION 1, compulsory, 30 marks, 20 minutes. 1.1 multiple choice 8 x 2 = 16. 1.2 matching 8 x 1 = 8. 1.3 give the term 6 x 1 = 6.

SECTION B: QUESTIONS 2, 3 and 4, answer any TWO, 40 marks and 30 minutes each, 80 marks. Q2 first main topic. Q3 second main topic. Q4 the combination of both.

SECTION C: QUESTIONS 5 and 6, answer any ONE, 40 marks, 40 minutes. Q5 first main topic. Q6 second main topic. Marked 2 / 26 / 10 / 2.

∴ 30 + 80 + 40 = 150, and 20 + 30 + 30 + 40 = 120 minutes exactly. The paper's own printed time budget uses every minute of the two hours with nothing left over, which is why you cannot afford a slow start on Section A.

QUESTION 5: MACROECONOMICS (40 marks, 40 minutes)

• Discuss in detail entrepreneurship as a factor of production and its remuneration. (26 marks)

• Evaluate the extent to which small business entrepreneurs can raise employment in South Africa. (10 marks)

INTRODUCTION (2)

Model: Entrepreneurship is the factor of production that gathers natural resources, labour and capital, organises them into a business and carries the risk of the venture, and it is rewarded with profit. ∴ Two ticks: a definition of the main concept and its remuneration named. Nothing here repeats the question's wording and nothing previews the body.

BODY: MAIN PART (26) · thirteen explained facts, two ticks each

1. The entrepreneur combines the other three factors. Natural resources, labour and capital do nothing on their own, so somebody must bring them together in the right proportions before any good or service exists.

2. The entrepreneur takes the initiative. The decision to start producing at all is made by the entrepreneur, which is why entrepreneurship is treated as a separate factor rather than as a kind of labour.

3. The entrepreneur bears the risk. Wages, rent and interest are paid whether or not the business succeeds, so the entrepreneur is the only participant whose reward is not contractually guaranteed.

4. The remuneration is profit, and profit is a residual. Profit is what remains after every other factor has been paid, which is exactly why it can be negative, and a loss is simply a negative residual.

5. Normal profit versus economic profit. Normal profit is the minimum return needed to keep the entrepreneur in this business rather than the next best one, and anything above that is economic profit.

6. Innovation. Entrepreneurs introduce new products, new methods and new markets, which is the mechanism by which an economy's productive capacity grows rather than merely repeating itself.

7. Decision making and management. The entrepreneur decides what to produce, how much, by which method and at what price, and those decisions determine whether resources are used efficiently.

8. Entrepreneurship creates employment. Every new firm hires labour, so entrepreneurship is one of the few factors that expands demand for another factor directly.

9. It contributes to national output. The value the firm adds enters gross domestic product, so entrepreneurial activity is measurable in the national accounts, not merely admirable.

10. Skills required. An entrepreneur needs the ability to identify an opportunity, to plan, to raise finance, to manage people and to sell, and a shortage of any one of these is a common cause of failure.

11. Sources of finance shape who can be an entrepreneur. Own savings, family funding, bank credit and development finance are the usual routes, and a person without collateral is often excluded from the third of these.

12. Obstacles in the South African context. High start-up costs, difficulty obtaining credit, regulatory paperwork, unreliable infrastructure and crime all raise the risk the entrepreneur must carry.

13. State and private support. Small-business development agencies, incubators, mentorship programmes and preferential procurement exist precisely because the private return to entrepreneurship understates its benefit to the whole economy.

Note on the cap: the thirteen bold openers above act as headings, and headings plus examples cannot carry more than 8 of the 26. That is fine here, because every heading is followed by real explanation, which is where the other 18 marks come from.

BODY: ADDITIONAL PART (10) · judgement, not a list

Model: Small-business entrepreneurs can raise employment significantly, but the extent is limited and it depends on conditions the entrepreneur does not control. On the positive side, small firms are labour intensive relative to large capital-intensive firms, so each rand of investment in them creates more jobs; they can start quickly and in places large firms will not go, which reaches unemployed people where they actually live; and they train people on the job, which raises employability even for those who later leave. Against this, however, a large proportion of small firms close within their first years, so the jobs they create are often not durable; many of the jobs are low paid and part time, which raises the employment number without raising household income much; and small firms cannot absorb the scale of unemployment the country faces on their own. On balance, therefore, small-business entrepreneurship is a necessary part of any employment strategy but not a sufficient one, and its effect is largest when it is paired with cheaper credit, simpler regulation and reliable infrastructure, because those are the constraints that decide whether a new firm survives long enough for its jobs to count.

Why it earns the full 10: it takes a position, gives arguments on both sides, uses linking words that signal weighing, and ends with a conditional verdict. A bulleted list of five advantages would have earned 2.

CONCLUSION (2)

Model: Entrepreneurship is therefore the organising and risk-bearing factor whose reward, profit, is the residual left after all other factors have been paid. In my view its importance to South Africa is less about the profit it earns the entrepreneur than about the employment and innovation it delivers to everyone else, which is why lowering the cost and the risk of starting a business should be treated as economic policy rather than as charity. ∴ Two ticks: a summary sentence and a clear judgement of my own, with no body facts repeated.

∴ 2 + 26 + 10 + 2 = 40.