1.1 Why is South African Government regarded as a mixed economy? (2) 1.2 How is the government funding its expenditure? (2) 1.3 Give reason why businessman or woman might be happier in a free market economy. (2) 2. How efficient is the state in addressing the disadvantages of the market system? (8)

Below are sample answers that address the questions: 1.1 Why is South African Government regarded as a mixed economy? (2) • South Africa is classified as a mixed economy because its economic system includes both a strong private sector and significant government intervention. • Key industries are partly in private hands, while the government regulates, owns, or supports strategic sectors to address social needs and market failures. 1.2 How is the government funding its expenditure? (2) • The government funds its expenditure primarily through taxation—comprising income tax, value-added tax, corporate tax, and other forms of taxes. • Additionally, it raises funds through borrowing (issuing bonds and taking loans) and fees for public services. 1.3 Give one reason why a businessman or businesswoman might be happier in a free market economy. (2) • In a free market economy, entrepreneurs enjoy fewer government restrictions and regulations, which often leads to greater freedom in making business decisions and potentially higher profit margins. • This environment can encourage innovation and responsiveness to consumer demands, making it more appealing for business operators seeking flexibility and opportunity. 2. How efficient is the state in addressing the disadvantages of the market system? (8) • The state plays a crucial role in correcting market failures and addressing the shortcomings of a pure market approach. One of its key interventions is the provision of public goods (such as healthcare, education, and infrastructure) that the market may underprovide. • Through progressive taxation and social welfare programs, the government attempts to reduce income inequality and provide a safety net for disadvantaged groups, thereby mitigating the harsh effects of market competition. • Regulations on monopolies, environmental controls, and labor laws are other examples of state intervention designed to protect consumers, workers, and the environment—areas where the market might otherwise falter. • However, the efficiency of these interventions is often debated. In some cases, bureaucratic inefficiencies, corruption, and mismanagement can lead to a slower or less effective response to market failures. • Additionally, overly rigid regulatory environments might stifle innovation and entrepreneurship, thus inadvertently creating inefficiencies and reducing economic dynamism. • On balance, while state measures have helped to alleviate many disadvantages of the market system, challenges remain in ensuring that interventions are timely, transparent, and appropriately targeted to address the evolving needs of society. • Overall, the state has been moderately efficient: it has achieved significant milestones in providing essential public services and reducing inequality, yet ongoing issues with policy implementation and resource allocation suggest there is still room for improvement.