QUESTION ONE [30]

The South African housing market has been doing surprisingly well, given the increase in demand levels. Analyse the factors contributing to the increasing demand in the housing market. (15)
Choose a contemporary business and discuss any three factors that may result in economies of scale for the firm. (15)

QUESTION TWO [20]

UBER competes with several similar service providers such as Taxify, Zebra Cabs, Orange Cabs etc. Justify the type of market structure that UBER operates in and evaluate the likelihood of UBER making an economic profit in the long-run.
QUESTION THREE [20]

Read the extract below and answer the question that follows:
New data suggests record economic drop for South Africa
Key South African data released this week suggests a record economic contraction in the second quarter as the damage wrought by a nationwide lockdown to curb the spread of the coronavirus pandemic becomes clear.
Manufacturing production, mining output and retail sales plunged in the three months through June as the country imposed a strict lockdown on 27 March that shuttered almost all activity except essential services for five weeks.
With mining and manufacturing contributing about a fifth of total gross domestic product and trade, which includes retail, making up 15%, the drop means the recession probably became much deeper in the second quarter.
Africa’s most-industrialised economy contracted an annualised 2% in the three months through March, extending its recession to a third-quarter even before the impact of the global pandemic and measures to curb its spread were felt.

Reserve Bank forecasts show an annualised drop in GDP of 32.6% for the three months through June from the previous quarter.
That would be the deepest quarterly decline since at least 1990 and is conservative relative to Investec Bank Ltd’s estimate of a 48.2% annualised contraction. The statistics office is scheduled to publish GDP data for the second quarter on 8 September.
The government started a gradual and phased re-opening of the economy on May 1 and restrictions were eased to so-called level 3 a month later. However, the closure of some businesses and scaled down operations that have lead to job losses are expected weigh on demand, slowing the recovery.
The National Treasury sees the economy contracting by 7.2% this year, the most in almost nine decades.
What Bloomberg’s economist says…
“Bad as it is, the 2Q contraction in growth has already happened. What matters now is the strength and pace of recovery.
“With restrictions now lifted on most sectors, the main constraint on growth will shift away from the ceiling created by containment measures and onto demand. The latest data already point to slowdown of momentum — an indication that economic activity and demand remains subdued. We therefore expect a weak recovery.”
(Source: https://businesstech.co.za/news/business/425236/new-data-suggests-record- economic-drop-for-south-africa/)

Evaluate the major economic indicators as discussed in the article and formulate appropriate fiscal and monetary policies that would be required to address these indicators.

Answers to Above Questions on Economucs

Answer 1: An analysis of the South African housing market indicates that there are many factors that contribute towards an increase in demand for housing in the industry. The major one includes the low interest rates for the South African borrowers which encourage them to buy more and more properties. Along with this, there is an increasing rate at which urbanisation is taking place across the country. The government policies are also supportive and the growing middle class is also a major factor that contributes towards rise in the housing demand across the country.