Answers to activity 1

1. Cost benefit analysis  (2)
2. Gautrain Coega (2)
   Any other relevant fact.
3. Gautrain: Better infrastructure 33More effective transport
   Coega: Job creation/increased standard of living  Any other relevant fact. (any 2 × 2) (4)
   [8]

Answer to activity 2

• Taxation, subsidies and legislation are used to control merit and
  demerit goods. 
• Merit goods: higher consumption of goods is regarded as good for
  society government makes use of subsidies (distribute
  condoms). 
• Demerit goods: government imposes taxes to discourage
  consumption  (cigarettes). 
  [8]

Answer to activity 3

• Non-rivalry: Consumption by one person does not reduce
  consumption by another individual e.g. a lighthouse 
• Non-excludability: Consumption can’t be confined to those
  who pay for it (free riders can use it) e.g. radio and television
  [8] 

Answer to activity 4

• Through the national budget and taxation
• Change the distribution of income by: Subsidies, transferring
  payments to poor households, providing goods and services free
  of charge, implementing job creation programmes
• Regulatory measures: Land reform, labour legislation,
  preferential access to government procurement contracts, black
  economic empowerment policies 
  [8] 

Answers to activity 5

1. Pollution 
2. Legal actions and taxes  (any 1)
3. To reduce the pollution 
4. Consumer prices will increase