This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
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1. A tariff is a charge or rate applied to a service, such as water or electricity, which varies depending on the amount of the service consumed. In this context, the rate increases as more units are used. 2. An indigent household is a household that qualifies for social support, often due to low income, and receives certain benefits, such as free basic water services up to a specified limit. 3. The city of Cape Town is located in the Western Cape province. 4. To calculate the cost for 33kl of water under 2020/21 tariffs for a non-indigent household: Step 1: Calculate cost for the first 6kl. 6 kl × R17.37/kl = R104.22 Step 2: Calculate cost for the next 4.5kl (from 6kl to 10.5kl). 4.5 kl × R23.87/kl = R107.415 Step 3: Calculate cost for the remaining 22.5kl (from 10.5kl to 33kl). 22.5 kl × R32.43/kl = R729.675 Total cost: R104.22 + R107.415 + R729.675 = R941.31 Mr. Sithole will pay R941.31. 5. To calculate the cost for 33kl of water under 2021/22 tariffs for a non-indigent household: Step 1: Calculate cost for the first 6kl. 6 kl × R18.23/kl = R109.38 Step 2: Calculate cost for the next 4.5kl (from 6kl to 10.5kl). 4.5 kl × R25.06/kl = R112.77 Step 3: Calculate cost for the remaining 22.5kl (from 10.5kl to 33kl). 22.5 kl × R34.05/kl = R766.125 Total cost: R109.38 + R112.77 + R766.125 = R988.275 Mr. Sithole will pay R988.28. 6. To verify Mr. Sithole's claim for 20kl of water under 2020/21 tariffs: Non-indigent household cost for 20kl: Step 1: 6 kl × R17.37/kl = R104.22 Step 2: 4.5 kl × R23.87/kl = R107.415 Step 3: (20 - 10.5) kl × R32.43/kl = 9.5 kl × R32.43/kl = R308.085 Total non-indigent cost: R104.22 + R107.415 + R308.085 = R519.72 Indigent household cost for 20kl: Step 1 (first 6kl): Free = R0.00 Step 2: 4.5 kl × R23.87/kl = R107.415 Step 3: (20 - 10.5) kl × R32.43/kl = 9.5 kl × R32.43/kl = R308.085 Total indigent cost: R0.00 + R107.415 + R308.085 = R415.50 Percentage difference: Non-indigent cost - Indigent costIndigent cost × 100\% = R519.72 - R415.50R415.50 × 100\% = R104.22R415.50 × 100\% ≈ 25.08\% Mr. Sithole's claim that a non-indigent household will pay 20% more is ❌ incorrect. The calculation shows they will pay approximately 25.08% more. 7. People pay more if they use more water to encourage water conservation and ensure sustainable resource management. This tiered pricing structure also helps cover the increasing costs associated with supplying higher volumes of water. Send me the next one 📸