ATTEMPT ALL QUESTIONS ON PRICE MECHANISM

1. Mention any four reasons for your government’s interference with the operation of price mechanism (4 mks)
2. (a) Define the term consumer sovereignty (1 mk)

(b)State any three limitations to consumer sovereignty in your country (3 mks)

3. Explain the meaning of the following terms:

(a) Marginal utility of income (2 mks)

(b) Marginal rate of substitution (2 mks)

4. (a) Distinguish between minimum price and minimum price legislation (2 mks)

(b) State any two negative effects of minimum price legislation in an economy (2 mks)

5. Distinguish between buffer stock and stabilization fund policies as used in economics ( 4 mks)