ATTEMPT ANY FIVE QUESTIONS FROM ANY SECTIONS

1. (a)If the price of a given commodity increases from sh.20,000 to sh.22,000 and this results into an increase in the quantity supplied of that commodity from 50kg to 60 kg; calculate the price elasticity of supply. (3 mks)

(b) State the degree of elasticity of supply( 1mk)

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

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

4. Explain the meaning of the following terms:

(a) Marginal utility of income (2 mks)

(b) Marginal rate of substitution (2 mks)

5. (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)

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

SCETION B

1. (a) Distinguish between a free enterprise and a command economy (4 mks)

(b) What are the arguments for and against a free enterprise economy? (16 mks)

2. (a) Distinguish between individual demand and market demand (4 mks)

(b) Explain the factors that determine the quantity demanded of a commodity in an economy (16 mks)

3. (a) Distinguish between increase in demand and increase in quantity demanded (4 mks)

(b) Explain the factors that lead to a decrease in demand for commodities in your country (16 mks)

4. (a) Explain the concept ‘regressive demand curve’ (4 mks)

(b) Under what circumstances may the demand curve be regressive?(16 mks)

5. (a) Distinguish between competitive supply and joint supply (4 mks)

(b) Explain the factors that influence the elasticity of supply (16 mks)

6. Study the table below and answer questions that follow:

7. (a)(i) Draw a supply curve using then information in the schedule (2 mks)

(ii)Calculate the price elasticity of supply for the commodity from point A to D.( 2mks)

(b)Examine the factors that influence the quantity of a commodity supplied in an economy. (16 mks)

8. (a)distinguish between supply function and supply schedule (4 mks)

(b) Explain the factors that limit quantity supplied of a commodity in an economy (16 mks)

9. (a) Distinguish between a change in supply and a change in quantity supplied (4 mks).

(b)Explain the factors that cause a change in supply for a commodity (16 mks)

10. (a) Distinguish between price elasticity of demand and income elasticity of demand (4 mks)

(b) Explain the factors that influence price elasticity of demand (16 mks)

11. (a) Explain the methods of price determination in your country (6 mks)

(b)What are the effects of agricultural price fluctuations in your country?(14 mks)

12. (a) What are the conditions necessary for the success of price mechanism? (6 mks)

(b) Present a case for and against price mechanism in an economy (14 mks)

13. (a)Explain the role of price mechanism in the allocation of resources in an economy (8 mks)

(b)Discuss the implications of relying on price mechanism in the allocation of resources in an economy (12 mks)

14. (a) Discuss the merits of relying on price mechanism in an economy (12 mks)

(b) What factors limit price mechanism from allocating resources efficiently? (8 mks)

15. (a) What is meant by the term ‘price mechanism’? (1 mk)

(b)Explain the role of price mechanism in the allocation of resources (16 mks)

16. (a) Explain the defects of price mechanism in an economy (10mks)

(b) What steps should the government take to alleviate the defects of price mechanism? (10 mks)

17. (a)Account for price instability of agricultural products in your country (10 mks)

(b) What are the effects of agricultural product price instability in your country? (10 mks)

18. (a)Distinguish between price floor and price ceiling (4 mks)

(b)Examine the consequences of price controls in an economy (16 mks)

19. (a)Differentiate between price control and price discrimination (4 mks)

(b)Examine the merits and demerits of price control in any economy (16 mks)

20. (a) Distinguish between price floor and price support (4 mks)

(b) Discuss the effects of price control in an economy (16 mks)

21. (a)Examine the causes of agricultural price fluctuations in your country (10 mks)

(b) What measures can be taken to stabilize prices of agricultural products in your country? (10 mks)