Economics Questions



Paper 1

INSTRUCTIONS: Answer all the questions
QUESTION 1.
1a) Briefly explain the following;                                                                   (6 marks)
I) opportunity cost
ii) Scarcity
iii) Choice
b) Explain the advantages and disadvantages of free market economic system  (12 marks)
QUESTION 2
a) Explain how the government influences its resources                                          (10 marks)
b) List the factors limiting consumer sovereignty                                                      (10 marks)
QUESTION 3
a) Explain the factors affecting demand        of a commodity in the market            (8 marks)
b) With the aid of a diagram explain the movement along and shift in demand curve (12 marks)
QUESTION 4
a) The demand function of a good is given by the following
                                                                                                                                                                                    Qd=150-3p-p2
Where Qd- quantity demanded
            P-price
Required:
i)                    Calculate the point elasticity of demand when price is sh.5                   (4 marks )
ii)                  Comment on the results above                                                                (2 marks )
b) What is income elasticity                                                                                       (2 marks)
c) With the illustration of a diagram explain the abnormal supply curve                 (6 marks)
d) Explain the factors affecting supply of a commodity in the market                     (6 marks)
QUESTION 5
a) The following data shows the demand and supply schedule in a hypothetical market.
Price per kg                            quantity demanded quantity supplied
(000) kgs                     (000) kgs
20                                            110                              5
40                                            90                                46
60                                            77.5                             77.5
80                                            67.5                             100
100                                          62.5                             115
120                                          60                                122.5
Required:
i)                    Plot the graph of the demand and supply curves                                     (8 marks )
ii)                  Identify the equilibrium price and quantity                                             (4 marks )
b) Briefly explain the categories of elasticity of demand                                          (8 marks)

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