South Africa has over 700 state-owned enterprises, and some of them have carried out vertical integration and horizontal integration. A few of these state-owned enterprises are monopolies, such as a railway monopoly. A prominent South African economist has suggested that a larger share of the country’s resources should be used to construct and operate new railway lines and stations.
(a)[2]
Define the term state-owned enterprise.
(b)[4]
Explain the difference between vertical integration and horizontal integration, and give an example of each.
(c)[6]
Analyse how a monopoly could help consumers.
(d)[8]
Discuss whether a country ought to commit more of its resources to constructing and operating new railway lines and stations.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A firm owned by the government/state” …