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Question 1 Report
An arrangement of data in rows and columns is referred to as
Answer Details
An arrangement of data in rows and columns is referred to as a "table". It is a way of presenting data in a structured and organized manner that allows for easy comparison and analysis. Tables are commonly used in various fields, including statistics, finance, and science, to display and summarize large amounts of data. The data is organized in rows, which run horizontally, and columns, which run vertically. Each row represents a single item or observation, while each column represents a specific variable or category. Tables are useful because they allow for quick and efficient comparisons of data, as well as the ability to easily sort and filter the data to extract specific information.
Question 2 Report
A market structure where profit is maximized when marginal revenue, marginal cost and price are equal is known as
Answer Details
A market structure where profit is maximized when marginal revenue, marginal cost and price are equal is known as perfect competition. In perfect competition, there are many buyers and sellers, and no one has the power to influence prices. As a result, firms in perfect competition are price takers and must accept the market price. In this type of market, firms can only make profit by producing at the point where their marginal revenue equals their marginal cost, and where the market price is equal to that point.
Question 5 Report
Human wants are
Answer Details
Human wants are unlimited. This means that people have unlimited desires and needs for goods and services. As one want is satisfied, another arises, leading to an endless cycle of wants. There is no limit to the number of wants that humans can have, and this is because as society advances and technology improves, new wants arise. Therefore, no matter how much is produced, human wants will never be fully satisfied.
Question 6 Report
If a 20% rise in price of Whiskey leads to a 30% increase in quantity demanded of Schnapps, the cross elasticity of demand is
Answer Details
The cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. In this case, the 20% rise in the price of Whiskey leads to a 30% increase in quantity demanded of Schnapps. This means that the two goods are substitutes, as the increase in the price of Whiskey led consumers to switch to the relatively cheaper alternative, Schnapps. The formula for cross elasticity of demand is the percentage change in quantity demanded of good Y divided by the percentage change in the price of good X: Cross elasticity of demand = (% change in quantity demanded of Y) / (% change in price of X) Using the values given in the question, we can calculate the cross elasticity of demand as follows: Cross elasticity of demand = (30% / 20%) = 1.5 Therefore, the cross elasticity of demand is 1.5.
Question 7 Report
If the labour force of a country is 2.5 million and 2 million are employed , what is the unemployment rate?
Answer Details
The unemployment rate is the percentage of the labor force that is unemployed and actively seeking employment. In this case, the labor force is 2.5 million and the number of employed people is 2 million. Therefore, the number of unemployed people is 2.5 million - 2 million = 0.5 million. To calculate the unemployment rate, we divide the number of unemployed people by the labor force and multiply by 100 to express the result as a percentage. So, the unemployment rate is (0.5 million / 2.5 million) * 100 = 20%. Therefore, the correct option is: 20%.
Question 8 Report
The production possibility curve (PPC) indicates that as more of one good is produced.
Answer Details
The production possibility curve (PPC) indicates that as more of one good is produced, less of the other goods is produced. This is because resources such as labor, capital, and raw materials are limited, and using them to produce more of one good means there are fewer resources available to produce other goods. The PPC shows the tradeoff between producing one good versus another, and the opportunity cost of producing more of one good is the amount of the other good that must be given up. Therefore, the PPC is a graphical representation of the concept of scarcity and the need to make choices about how to allocate limited resources.
Question 9 Report
The increase in population growth in big cities is referred to as
Answer Details
The increase in population growth in big cities is referred to as urbanization. Urbanization is the process of the migration of people from rural areas to urban areas, resulting in the growth and expansion of cities. This process is usually driven by economic opportunities, social factors, and modernization. As people move to cities, the population increases, leading to the development of infrastructure, housing, and other amenities to support the growing population. Urbanization can have both positive and negative impacts on society, such as increased economic opportunities and improved access to services, as well as overcrowding, pollution, and social problems.
Question 10 Report
A rise in government expenditure can lead to
Answer Details
A rise in government expenditure can lead to higher inflation. This is because an increase in government expenditure means that there is more money available for people to spend, which can lead to a higher demand for goods and services. When demand is high, prices tend to go up, which leads to inflation. Additionally, government expenditure can increase the money supply, which can also contribute to inflation.
Question 11 Report
National income is used to measure
Answer Details
National income is used to measure a country's economic growth. It refers to the total value of goods and services produced within a country's borders over a specified period, usually a year. National income includes income earned by both individuals and firms and is a useful tool for assessing a country's economic performance over time. It is often used in combination with other indicators such as GDP, inflation, and unemployment to provide a comprehensive picture of a country's economic health.
Question 12 Report
A supply curve which is vertical has an elasticity co-efficient of
Answer Details
A vertical supply curve represents a situation where the quantity supplied does not respond to changes in price. This means that the quantity supplied remains constant regardless of changes in price. The elasticity coefficient is a measure of how responsive the quantity supplied or demanded is to changes in price. In the case of a vertical supply curve, the elasticity coefficient is zero because there is no change in quantity supplied even when there is a change in price. Therefore, the correct option is 0.0.
Question 13 Report
In which of the following markets does a firm have power to make super normal profits both in the short run and long run?
Answer Details
A firm has the power to make super normal profits both in the short run and long run in a monopoly market. In a monopoly market, there is only one supplier of a product or service, which gives the firm complete control over the price and quantity supplied. The firm can set a price above the marginal cost of production, allowing it to earn super normal profits. In the long run, barriers to entry prevent other firms from entering the market, allowing the monopoly firm to continue earning super normal profits. Therefore, the correct answer is Monopoly.
Question 14 Report
One profitable form of business undertaken by the commercial banks is
Answer Details
One profitable form of business undertaken by commercial banks is lending money to borrowers. Commercial banks earn profits by charging interest on loans that they extend to borrowers. These loans can be in the form of personal loans, mortgages, or business loans. Banks carefully evaluate the creditworthiness of borrowers and set interest rates accordingly. As long as the interest earned from the loans is higher than the cost of obtaining funds to lend, banks can earn a profit. Therefore, lending money is one of the key functions of commercial banks.
Question 15 Report
If there are no barriers to entering a market, it means that
Answer Details
If there are no barriers to entering a market, it means that anyone can become a buyer or a seller. In other words, there are no restrictions or obstacles preventing new firms or individuals from entering the market to compete with existing sellers. This encourages competition, which can lead to lower prices, better quality products, and greater innovation. It also means that consumers have more choices, and sellers must work harder to differentiate themselves from their competitors. Therefore, a lack of barriers to entry can result in a more efficient and dynamic market.
Question 16 Report
The difference between the money cost and the real cost of any item is that
Answer Details
The correct answer is: real cost is the alternative forgone while the money cost is the actual amount paid for buying the item. Money cost refers to the amount of money that is spent on a good or service. Real cost, on the other hand, refers to the alternative that must be given up in order to obtain that good or service. This alternative is often referred to as the opportunity cost. So, the real cost of an item is not just the amount of money that was spent on it, but also the value of the next best alternative that was given up to obtain it. For example, if you choose to buy a new phone for $500, the money cost is $500. However, the real cost also includes the opportunity cost of what else you could have done with that $500, such as investing it, saving it, or buying a different item.
Question 17 Report
A rational consumer is one who
Answer Details
A rational consumer is one who spends his income to maximize satisfaction. This means that the consumer will make choices that will provide the greatest level of satisfaction, given their limited income and the prices of goods and services. A rational consumer will consider the marginal utility (the additional satisfaction gained from consuming an extra unit) and the price of each good or service before making a purchasing decision. In contrast to what some people believe, being a rational consumer does not mean that a person behaves in a particular way all the time, or that they know the price of all goods and buy the cheapest, or that they are not influenced by advertisement.
Question 19 Report
A tax is regressive if the
Answer Details
A tax is regressive if the rate of tax decreases as income increases. This means that people with lower incomes pay a higher percentage of their income in taxes compared to people with higher incomes. This can lead to a greater burden on low-income households and may exacerbate income inequality.
Question 20 Report
A firm will shut down in the long run if its earning is
Answer Details
A firm will shut down in the long run if its earning is less than normal profit. In economics, normal profit refers to the minimum level of profit necessary to keep a firm in business in the long run. This includes the opportunity cost of the entrepreneur's time and capital investment, as well as any other costs necessary to maintain the business. If a firm's earning is less than this level of profit in the long run, it is not covering all of its costs and will eventually go out of business. Therefore, a firm will shut down if its earning is less than normal profit, as it cannot sustain its operations in the long run.
Question 21 Report
When a country's net income from abroad is added to its total output, the result is
Answer Details
When a country's net income from abroad is added to its total output, the result is the Gross National Product (GNP). GNP is a measure of the total economic output of a country's citizens, including its production and income from foreign investments. It is calculated by adding the value of all goods and services produced by a country's residents, regardless of their location, and adding any income earned by residents from foreign sources. Essentially, GNP is a measure of the total economic activity of a country's citizens, regardless of where that activity takes place.
Question 22 Report
price fixed above the equilibrium is to
Answer Details
When the price is fixed above the equilibrium, it leads to a situation where the quantity supplied by the producers is more than the quantity demanded by the consumers. This usually happens when the government wants to protect agricultural producers from the market forces of demand and supply. By fixing the price above the equilibrium, the government ensures that the producers get a higher price for their produce than what they would get in a free market. However, this policy can also lead to some negative consequences. It can discourage producers from improving the quality of their produce or from being efficient in their production because they are guaranteed a high price regardless of the quality or efficiency. Also, it can lead to surpluses of unsold goods, which can be wasteful and costly to the government. Overall, fixing the price above the equilibrium is a policy that favours agricultural producers at the expense of consumers, and it is often used as a form of protectionism.
Question 24 Report
which of the following is not true about land?
Answer Details
The statement that is not true about land is: "land is mobile." This is because land is a fixed resource and cannot be moved from one place to another. It is the other factors of production, such as labor and capital, that can be mobile.
Question 25 Report
which of the following does not change in the short run?
Answer Details
In the short run, at least one factor of production is fixed, which means that it cannot be changed. Therefore, fixed cost does not change in the short run. Fixed costs are expenses that do not vary with changes in the level of production or output, such as rent, salaries, and property taxes.
Question 26 Report
Natural growth rate of population can be defined as the
Answer Details
The natural growth rate of population can be defined as the difference between the birth rate and the death rate in a given population over a certain period of time, usually a year. It represents the rate at which the population is growing due to the excess of births over deaths. For instance, if the birth rate is 20 per 1,000 people per year and the death rate is 10 per 1,000 people per year, the natural growth rate would be 10 per 1,000 people per year. The natural growth rate can be used to estimate future population trends and plan for future needs such as healthcare, education, housing, and employment.
Question 27 Report
A normal demand curve slopes
Answer Details
A normal demand curve slopes downward from left to right. This means that as the price of a product or service decreases, the quantity demanded of that product or service increases, and vice versa. This is the typical relationship between price and demand in a competitive market, where consumers are willing to pay less for a product or service as the supply of that product or service increases.
Question 29 Report
The resource used in production are called
Answer Details
The resources used in production are called factors of production. These are the resources required to produce goods and services. The three main factors of production are land, labor, and capital. Land refers to natural resources such as land, water, and minerals, while labor refers to the work done by people to produce goods and services. Capital refers to the tools, equipment, and other resources used in the production process. The combination of these factors of production determines the quantity and quality of the goods and services produced.
Question 30 Report
The co-efficient of income elasticity of demand for inferior goods is
Answer Details
The coefficient of income elasticity of demand for inferior goods is negative. This is because when consumers' income increases, they tend to buy less of the inferior goods and switch to buying better alternatives, causing the demand for inferior goods to decrease. The negative sign indicates the inverse relationship between income and demand for inferior goods.
Question 31 Report
Palm oil and palm kernel have
Answer Details
Palm oil and palm kernel have a joint supply. This means that the production of one leads to the production of the other. Palm oil is extracted from the fleshy part of the palm fruit, while palm kernel oil is extracted from the kernel or seed inside the fruit. Therefore, the production of palm oil automatically leads to the production of palm kernel oil as a by-product. They are both widely used in various industries, such as food, cosmetics, and biofuel.
Question 32 Report
if the current price of an apple is twice that of last year, it implies that the value of money is
Answer Details
If the current price of an apple is twice that of last year, it means that the price level has increased over time. This suggests that the value of money has decreased, and therefore, it is falling. In other words, the purchasing power of money has declined, and it now takes more money to buy the same amount of goods and services as before.
Question 33 Report
The grouping of the population according to the economic activities people engage in is
Answer Details
The grouping of the population according to the economic activities people engage in is occupational distribution. This refers to the classification of individuals into various occupational categories based on the type of work they do. It is a way of analyzing and understanding the structure of an economy and its workforce. Some common occupational categories include agriculture, manufacturing, services, and professional occupations such as doctors, lawyers, and engineers. Occupational distribution provides insights into the level of development of an economy, the skills of its workforce, and the potential for economic growth.
Question 34 Report
The following are features of subsistence agriculture except
Answer Details
The following options describe features of subsistence agriculture, except for one. Subsistence agriculture is a type of farming where farmers grow crops to feed themselves and their families, rather than for commercial purposes. - Little capital: Subsistence agriculture is typically characterized by farmers who have limited access to capital and rely on simple and traditional farming methods. - Processing of raw materials: Subsistence farmers often process their raw materials (e.g., grains) into food products for their own consumption. - Small allotments of land: In subsistence agriculture, farmers often work on small plots of land that are just large enough to provide for their family's needs. Therefore, the option that does not describe features of subsistence agriculture is: - Use of crude oil: Subsistence agriculture does not typically involve the use of crude oil, as it is not essential to the farming process and may not be readily available or affordable for subsistence farmers.
Question 35 Report
The effect of privatization on the industrial sector of a country is that it
Answer Details
Privatization is the transfer of ownership and control of public enterprises to private individuals or entities. The effect of privatization on the industrial sector of a country is that it ensures efficiency. This is because private individuals or entities operate for profit, and they are therefore incentivized to minimize costs and maximize profits. They are more likely to use resources efficiently and effectively, leading to increased productivity and output. Additionally, private enterprises are more likely to introduce new technologies and innovations, leading to increased efficiency in production. Overall, privatization can lead to a more efficient and productive industrial sector in a country.
Question 36 Report
The type of production that involve the tapping and harnessing of natural resources is
Answer Details
The type of production that involves the tapping and harnessing of natural resources is called primary production. This refers to the economic sector that involves the extraction and collection of natural resources from the earth or sea, such as agriculture, mining, forestry, and fishing. The primary sector is considered the foundation of any economy, as it provides the raw materials necessary for other industries to manufacture finished products. Examples of primary production activities include farming crops and livestock, drilling for oil, mining minerals and ores, and harvesting timber.
Question 37 Report
When governments wants to discourage consumption, they tax goods whose demand is
Answer Details
When governments want to discourage consumption of a certain good, they tax goods whose demand is price inelastic. This is because when the demand for a good is price inelastic, consumers are not very responsive to changes in price and will continue to buy the good even if the price increases due to taxes. By taxing goods with price inelastic demand, the government can increase the price of the good and reduce its consumption, without causing a significant decrease in government revenue. In contrast, if a good has price elastic demand, consumers are very sensitive to changes in price, and even small increases in price may cause a significant decrease in demand, resulting in a decrease in government revenue.
Question 38 Report
A firm's main aim is to
Answer Details
A firm's main aim is to maximize profits. This means that the firm's goal is to earn as much revenue as possible while minimizing costs. By doing so, the firm can generate profits, which can then be reinvested into the business or distributed to shareholders. While there may be other objectives that a firm may pursue, such as increasing market share or satisfying the ambitions of its managers, ultimately the firm's success is measured by its ability to generate profits.
Question 39 Report
which of the following is not a consequence of increased unemployment?
Answer Details
Question 40 Report
The demand for money to take advantage of changes in bond prices is the
Answer Details
The demand for money to take advantage of changes in bond prices is known as the speculative motive. This refers to the desire to hold money to take advantage of investment opportunities that may arise in the future. In this case, investors may want to purchase bonds when prices are low and then sell them when prices increase in the future. The speculative motive is one of the three motives for holding money, alongside the transaction motive (to facilitate daily transactions) and the precautionary motive (to provide a buffer against unexpected events).
Question 41 Report
When total utility is constant, it means marginal utility is
Answer Details
When total utility is constant, it means that the additional satisfaction or usefulness gained from consuming one more unit of a good (marginal utility) is equal to zero. This is because the total utility is the sum of the marginal utilities of all the units consumed. Therefore, if total utility is not changing, it implies that the marginal utility is neither increasing nor decreasing but has reached a point of equilibrium where the additional satisfaction gained from consuming one more unit is zero.
Question 42 Report
Cost push inflation is caused by a
Answer Details
Cost push inflation is caused by a rise in the cost of production. When the cost of production increases, the firms try to maintain their profit margin by increasing the price of goods and services. As a result, the general price level increases, leading to inflation. For example, if the cost of raw materials or labour increases, the firms will have to spend more money to produce the same amount of goods. To maintain their profit margin, they will increase the price of the goods, leading to an increase in the general price level. This is known as cost-push inflation.
Question 43 Report
A consumer purchasing a commodity X will maximize his satisfaction if
Answer Details
A consumer purchasing a commodity X will maximize his satisfaction when the price of commodity X (Px) is equal to the marginal utility of commodity X (MUx). In other words, the consumer will buy more units of commodity X until the point where the additional satisfaction gained (MUx) is equal to the price paid for each unit (Px). So the correct option is "Px = MUx".
Question 44 Report
Deposit held in a commercial bank are part of
Answer Details
Deposits held in a commercial bank are part of the money supply. This is because when customers deposit money into their accounts, the bank is able to use that money to make loans to other customers or invest in various financial instruments. As a result, these deposits effectively become a part of the circulating money supply in the economy, and can be used for transactions such as purchases of goods and services, payment of bills, and other financial transactions.
Question 45 Report
The following are the loans granted by a commercial bank to different categories of individuals. Use the information to answer the questions that follow: Bankers $8,000, Farmers $8,000, Miners $7,000, Retailers $5,000, Tailors $4,000 Teachers $6,000, Drivers $4,000, Fishermen $3 000.
(a) Arrange the information in the form of a table grouping the individuals into: (i) Primary sector; (ii) Secondary sector; (iii) Tertiary sector.
(b) Express the loan to each sector of a ratio of the total loan granted
(c) Present the total loans granted to the sectors in a simple bar chart, (Use of graph sheet is essential)
(a) Grouping of borrowers by sector of production. The primary sector extracts raw materials from nature; the secondary sector processes them into finished goods; the tertiary sector renders services.
| Sector | Individuals | Loan ($) |
|---|---|---|
| Primary | Farmers, Miners, Fishermen | 8,000 + 7,000 + 3,000 = 18,000 |
| Secondary | Tailors | 4,000 |
| Tertiary | Bankers, Retailers, Teachers, Drivers | 8,000 + 5,000 + 6,000 + 4,000 = 23,000 |
| Total | 45,000 |
(b) Loan to each sector as a ratio of the total loan (total = \(\$45,000\)):
Combined, the ratio Primary : Secondary : Tertiary \(= 18 : 4 : 23\).
(c) Bar chart. On a graph sheet, place the three sectors on the horizontal axis and the loan amount (in $) on the vertical axis, choosing a scale such as \(2\text{ cm} = \$5,000\). Draw three separate bars of equal width but unequal height: Primary up to 18,000, Secondary up to 4,000 and Tertiary up to 23,000. Title the chart and label both axes clearly.
Answer Details
(a) Grouping of borrowers by sector of production. The primary sector extracts raw materials from nature; the secondary sector processes them into finished goods; the tertiary sector renders services.
| Sector | Individuals | Loan ($) |
|---|---|---|
| Primary | Farmers, Miners, Fishermen | 8,000 + 7,000 + 3,000 = 18,000 |
| Secondary | Tailors | 4,000 |
| Tertiary | Bankers, Retailers, Teachers, Drivers | 8,000 + 5,000 + 6,000 + 4,000 = 23,000 |
| Total | 45,000 |
(b) Loan to each sector as a ratio of the total loan (total = \(\$45,000\)):
Combined, the ratio Primary : Secondary : Tertiary \(= 18 : 4 : 23\).
(c) Bar chart. On a graph sheet, place the three sectors on the horizontal axis and the loan amount (in $) on the vertical axis, choosing a scale such as \(2\text{ cm} = \$5,000\). Draw three separate bars of equal width but unequal height: Primary up to 18,000, Secondary up to 4,000 and Tertiary up to 23,000. Title the chart and label both axes clearly.
Question 46 Report
(a) What is economic development? (b) Outline any five features of a Development Bank.
(a) Economic development is the process of sustained increase in a country's real output (real national income and per-capita income) accompanied by improvements in the structure of the economy and in the welfare of the people, such as better education, health, employment, income distribution and standard of living. It is growth plus qualitative and structural change, not merely a rise in output.
(b) Five features of a development bank:
Answer Details
(a) Economic development is the process of sustained increase in a country's real output (real national income and per-capita income) accompanied by improvements in the structure of the economy and in the welfare of the people, such as better education, health, employment, income distribution and standard of living. It is growth plus qualitative and structural change, not merely a rise in output.
(b) Five features of a development bank:
Question 47 Report
The supply situation for rice in country X over a period as shown in the table below. Use the information in the table to answer the questions that follow.
| Period | Price ($) | Quantity supplied (bags) |
| December 2004 | 30 | 100 |
| January 2007 | 40 | 150 |
| April 2009 | 50 | 160 |
(a) Calculate the co-efficient of price elasticity of supply for rice between December 2004 and January 2007.
(b) Is the supply of rice elastic? Give a reason for your answer.
(c) State any three reasons which may cause an increase in the supply of rice,
(a) Price elasticity of supply between December 2004 and January 2007
The coefficient is \( E_s = \dfrac{\%\,\Delta Q_s}{\%\,\Delta P} \). Between the two periods price rose from \$30 to \$40 and quantity supplied rose from 100 to 150 bags.
\[ \%\,\Delta Q_s = \frac{150-100}{100}\times 100 = 50\% \]
\[ \%\,\Delta P = \frac{40-30}{30}\times 100 = 33.33\% \]
\[ E_s = \frac{50}{33.33} = 1.5 \]
(b) Yes, the supply of rice is elastic, because \( E_s = 1.5 > 1 \): the percentage change in quantity supplied (50%) is greater than the percentage change in price (33.33%), so quantity supplied is highly responsive to price.
(c) Three reasons that may cause an increase in the supply of rice:
Answer Details
(a) Price elasticity of supply between December 2004 and January 2007
The coefficient is \( E_s = \dfrac{\%\,\Delta Q_s}{\%\,\Delta P} \). Between the two periods price rose from \$30 to \$40 and quantity supplied rose from 100 to 150 bags.
\[ \%\,\Delta Q_s = \frac{150-100}{100}\times 100 = 50\% \]
\[ \%\,\Delta P = \frac{40-30}{30}\times 100 = 33.33\% \]
\[ E_s = \frac{50}{33.33} = 1.5 \]
(b) Yes, the supply of rice is elastic, because \( E_s = 1.5 > 1 \): the percentage change in quantity supplied (50%) is greater than the percentage change in price (33.33%), so quantity supplied is highly responsive to price.
(c) Three reasons that may cause an increase in the supply of rice:
Question 48 Report
(a) What is international trade?
(b) Explain any four advantages of international trade.
(a) International trade is the exchange of goods and services across national boundaries, that is, trade between two or more countries. It comprises imports (goods and services bought from abroad), exports (goods and services sold abroad) and entrepot trade (re-export of imported goods).
(b) Four advantages of international trade:
Answer Details
(a) International trade is the exchange of goods and services across national boundaries, that is, trade between two or more countries. It comprises imports (goods and services bought from abroad), exports (goods and services sold abroad) and entrepot trade (re-export of imported goods).
(b) Four advantages of international trade:
Question 49 Report
(a)What is the demographic transition theory?
(b) Explain the three stages of the theory.
(a) The demographic transition theory explains the pattern of population change that a country passes through as it develops economically, describing how birth rates and death rates change over time and how this affects the rate of population growth. It states that societies move from a stage of high birth and high death rates, through a stage of falling death rates with still-high birth rates, to a stage of low birth and low death rates.
(b) The three stages:
Answer Details
(a) The demographic transition theory explains the pattern of population change that a country passes through as it develops economically, describing how birth rates and death rates change over time and how this affects the rate of population growth. It states that societies move from a stage of high birth and high death rates, through a stage of falling death rates with still-high birth rates, to a stage of low birth and low death rates.
(b) The three stages:
Question 50 Report
(a) Outline any five reasons why small scale firms are common in West Africa.
Five reasons why small-scale firms are common in West Africa:
Answer Details
Five reasons why small-scale firms are common in West Africa:
Question 51 Report
(a) Explain with examples the terms competitive demand and complementary demand.
(b) With the aid of diagrams, analyse the effect of a decrease in the import duty on cars on the price and consumption of petrol.
(a) Competitive (substitute) demand exists where two or more goods satisfy the same want, so that a rise in the demand for one reduces the demand for the other; the goods compete for the consumer's income. Examples: butter and margarine, tea and coffee, or different brands of soap.
Complementary (joint) demand exists where two goods are demanded together to satisfy a single want, so that a rise in the demand for one raises the demand for the other. Examples: cars and petrol, bread and butter, or pens and ink.
(b) Effect of a fall in the import duty on cars on the price and consumption of petrol. Cars and petrol are in complementary (joint) demand. A reduction in the import duty on cars lowers the cost of importing cars, so the supply of cars increases and the price of cars falls. At the lower price, more cars are bought and used.
Because petrol is used jointly with cars, the increased use of cars raises the demand for petrol at every price: the demand curve for petrol shifts to the right, from \(D\) to \(D_1\). Given the supply curve of petrol, this shift raises the equilibrium price of petrol and increases the quantity of petrol consumed. Thus a fall in the import duty on cars leads, through complementarity, to a higher price and higher consumption of petrol.
Two diagrams are used: (i) the car market, where the supply curve shifts right and the car price falls; (ii) the petrol market, where the demand curve shifts right (\(D\) to \(D_1\)) so that both price and quantity of petrol rise.
Answer Details
(a) Competitive (substitute) demand exists where two or more goods satisfy the same want, so that a rise in the demand for one reduces the demand for the other; the goods compete for the consumer's income. Examples: butter and margarine, tea and coffee, or different brands of soap.
Complementary (joint) demand exists where two goods are demanded together to satisfy a single want, so that a rise in the demand for one raises the demand for the other. Examples: cars and petrol, bread and butter, or pens and ink.
(b) Effect of a fall in the import duty on cars on the price and consumption of petrol. Cars and petrol are in complementary (joint) demand. A reduction in the import duty on cars lowers the cost of importing cars, so the supply of cars increases and the price of cars falls. At the lower price, more cars are bought and used.
Because petrol is used jointly with cars, the increased use of cars raises the demand for petrol at every price: the demand curve for petrol shifts to the right, from \(D\) to \(D_1\). Given the supply curve of petrol, this shift raises the equilibrium price of petrol and increases the quantity of petrol consumed. Thus a fall in the import duty on cars leads, through complementarity, to a higher price and higher consumption of petrol.
Two diagrams are used: (i) the car market, where the supply curve shifts right and the car price falls; (ii) the petrol market, where the demand curve shifts right (\(D\) to \(D_1\)) so that both price and quantity of petrol rise.
Question 52 Report
(a) What is centrally planned economy?
(b) Outline any four features of a capitalist economy.
(a) A centrally planned economy (also called a command or socialist economy) is an economic system in which the means of production are owned and controlled by the state, and a central planning authority takes the major economic decisions of what to produce, how to produce and for whom to produce. Prices, output and the allocation of resources are directed by the government rather than by the free interplay of demand and supply.
(b) Four features of a capitalist economy:
Answer Details
(a) A centrally planned economy (also called a command or socialist economy) is an economic system in which the means of production are owned and controlled by the state, and a central planning authority takes the major economic decisions of what to produce, how to produce and for whom to produce. Prices, output and the allocation of resources are directed by the government rather than by the free interplay of demand and supply.
(b) Four features of a capitalist economy:
Question 53 Report
(a) Differentiate between shares and debentures.
(b) Identify any four problems encountered by firms in raising capital,
(a) Difference between shares and debentures:
| Shares | Debentures |
|---|---|
| A share is a unit of the ownership capital of a company; the holder is a part-owner (member). | A debenture is a unit of a loan to a company; the holder is a creditor, not an owner. |
| Shareholders earn a dividend, which varies with profit and is not guaranteed. | Debenture holders earn a fixed rate of interest, payable whether or not profit is made. |
| Shareholders have voting rights and control the company. | Debenture holders have no voting rights in ordinary matters. |
| In liquidation, shareholders are paid last. | Debentures are often secured and are repaid before shareholders. |
(b) Four problems firms encounter in raising capital:
Answer Details
(a) Difference between shares and debentures:
| Shares | Debentures |
|---|---|
| A share is a unit of the ownership capital of a company; the holder is a part-owner (member). | A debenture is a unit of a loan to a company; the holder is a creditor, not an owner. |
| Shareholders earn a dividend, which varies with profit and is not guaranteed. | Debenture holders earn a fixed rate of interest, payable whether or not profit is made. |
| Shareholders have voting rights and control the company. | Debenture holders have no voting rights in ordinary matters. |
| In liquidation, shareholders are paid last. | Debentures are often secured and are repaid before shareholders. |
(b) Four problems firms encounter in raising capital:
Question 54 Report
(a) Define mobility of labour.
(b) Describe any four factors influencing the supply of labour.
(a) Mobility of labour is the ease with which workers can move from one job, occupation or geographical location to another. It has two forms: geographical mobility (movement from one place or region to another to work) and occupational mobility (movement from one occupation or grade of job to another).
(b) Four factors influencing the supply of labour:
Answer Details
(a) Mobility of labour is the ease with which workers can move from one job, occupation or geographical location to another. It has two forms: geographical mobility (movement from one place or region to another to work) and occupational mobility (movement from one occupation or grade of job to another).
(b) Four factors influencing the supply of labour:
Question 55 Report
(a) Outline any three objectives of the African Development Bank.
(b) State any two achievements of the African Development Bank.
(a) Three objectives of the African Development Bank (AfDB):
(b) Two achievements of the African Development Bank:
Answer Details
(a) Three objectives of the African Development Bank (AfDB):
(b) Two achievements of the African Development Bank:
Question 56 Report
(a) Describe the following types of co-operative societies;
(i) consumers' co-operatives;
(ii) producers' co-operatives;
(iii) thrift and credit co-operatives.
(b) Highlight any two problems faced by co-operative societies in West Africa
(a) Types of co-operative societies:
(b) Two problems faced by co-operative societies in West Africa:
Answer Details
(a) Types of co-operative societies:
(b) Two problems faced by co-operative societies in West Africa:
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