Question

AMANDA'S AMAZING AROMAS

Ayanda Ndlovu is the proud owner of her own coffee shop, situated in a busy shopping centre in Johannesburg. When she employed three waiters, she had to draw up employment contracts as required by South African Labour Law. She tries to keep her prices reasonable, as there are two other coffee shops in the same centre. She has recently invested in a bigger coffee machine that can make cappuccinos faster that the old machine.

Because of continuous load shedding, Ayanda had to buy a generator in order to keep the business’ doors open. This has a negative effect on the profitability of the business. One of the waiters is currently in Chris Hani Baragwanath hospital after being in a serious accident when the taxi he was travelling in, hit a pothole and collided with another car. Ayanda was recently approached by a friend who works at the local municipality. She told Ayanda that there is a tender out for the supply of coffee and muffins at all the council meetings, and that if Ayanda pays her R10 000, she will ensure that Ayanda receives the contract.

Amanda’s business is registered for VAT and tax with SARS, to which she has to make monthly payments. Ayanda has noticed a decline in the daily number of customers in her coffee shop. She thinks that the high unemployment rate is the reason for this.

Identify the type of economic system in the case study above.
A) Planned economy
B) Mixed economy
C) Market economy

Answer 1

Answer: The type of economic system in the case study above is a mixed economy.This is because the case study portrays characteristics of both market and planned economies. For example, Ayanda's coffee shop operates in a market economy, where prices are set by supply and demand, and there are other coffee shops in the same center that Ayanda has to compete with. On the other hand, the fact that Ayanda had to draw up employment contracts for her waiters as required by South African Labour Law and the fact that her business is registered for VAT and tax with SARS indicate that there are some elements of a planned economy in place. Additionally, the tender for the supply of coffee and muffins at all council meetings, as described in the case study, is also an example of a planned economy.

Explanation: hope this helps0^0

Answer 2

The type of economic system in the case study above is a mixed economy.

This is because the case study portrays characteristics of both market and planned economies. For example, Ayanda's coffee shop operates in a market economy, where prices are set by supply and demand, and there are other coffee shops in the same center that Ayanda has to compete with. On the other hand, the fact that Ayanda had to draw up employment contracts for her waiters as required by South African Labour Law and the fact that her business is registered for VAT and tax with SARS indicate that there are some elements of a planned economy in place. Additionally, the tender for the supply of coffee and muffins at all council meetings, as described in the case study, is also an example of a planned economy.