1. Community goods/public goods are non-excludable and non-rivalrous in consumption. It is impossible to charg

Question

1. Community goods/public goods are non-excludable and non-rivalrous in consumption. It is impossible to charge consumers a price because non-payers cannot be excluded from benefiting (free-rider

ScanSolve AI Tutor · Accepted Answer

**1.** Community goods/public goods are non-excludable and non-rivalrous in consumption. It is impossible to charge consumers a price because non-payers cannot be excluded from benefiting (free-rider problem).  
\boxed{	extbf{Free-rider problem}}

**2.** The public sector should participate to correct market failure, provide public and merit goods, address externalities, and ensure equitable resource allocation/stabilise the economy.  
\boxed{	extbf{Correct market failure}}

**3.** Government benefits from privatisation by generating revenue to reduce budget deficit/government debt, improve efficiency, and focus on core functions.  
\boxed{	extbf{Reduce budget deficit/debt}}

**4.** Slow economic growth leads to higher cyclical unemployment, lower tax revenue, increased budget deficit, reduced business confidence, and lower standard of living.  
\boxed{	extbf{Higher unemployment / budget deficit}}

**5.** Merit goods have positive externalities (social benefit > private benefit) and are underprovided by the market, so government provides them (e.g. education, healthcare) to maximise welfare.  
\boxed{	extbf{Positive externalities}}

**6.** An increase in VAT raises prices of goods/services (regressive tax), reducing real disposable income and purchasing power, thus lowering standard of living.  
\boxed{	extbf{Lower standard of living}}

**7.** South Africa's fiscal policy contributes to higher growth via expansionary measures: increased government spending on infrastructure (crowding in private investment), lower taxes to boost consumption/investment, or subsidies for key sectors.  
\boxed{	extbf{Increased government spending / lower taxes}}

**8.** Calculating total loan debt is necessary to assess debt sustainability (debt-to-GDP ratio), plan repayments, monitor interest burden, avoid default, and inform fiscal policy.  
\boxed{	extbf{Assess debt sustainability}}

**9.** Price stability (low/single-digit inflation) is very important as it encourages saving/investment, improves business planning, maintains purchasing power, and promotes economic growth.  
\boxed{	extbf{Very important / encourages investment}}

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