Check out Economics question and answers

 a) Complete the missing figures D, E, F, G and H.
1. The table below represents a traveler’s consumption of bottles of Pepsi. Study the table carefully and answer the questions that follow.
(b) Draw the demand curve for the traveler’s consumption of Coca-Cola. (The use of a graph sheet is essential).
(C) Explain the law of diminishing marginal utility as the basis for the slope of the traveler’s demand curve.
ANS: (C) According to the law, marginal utility falls when quantity consumed increases. In equilibrium MU= P. therefore, for MU to Call, price must Call to encourage the consumer to consume more. In other words, it is as price falls that quantity demanded increases as shown in the demand curve.
2. (a) State and explain the law of comparative cost advantage.
(b) Give two limitations of the law as a theory of international trade.
ANS: (a)
(b) Some limitations of the law are:
– It assumes that there are no transport costs.
– It assumes free mobility of factors of production.
– It assumes that production conditions (technology and the resource base of countries) will remain the same over time.
3. (a) Why is scarcity a fundamental problem in Economics?
(b) Give a reason why Economics is a;
(i) Science;
(ii) Social Science.
ANS: (a) Economics seeks to study the relationship between ends and means. Ends are unlimited while the means are limited. Scarcity means resources are limited in relation to the ends. Economics is therefore concerned with allocating the limited resources among the competing and unlimited wants.
(b) (i) Economics is a science because it adopts the scientific method.
(ii) Economics is a social science because it studies human behaviour. e.g. If the price of a commodity rises, people will buy less, other things equal.
4. (a) What is a centrally planned economy?
(b) Outline any four features of a capitalist economy?
ANS: (a) A centrally planned economy is one in which there is public ownership of the means of production and in which the decisions as to what to produce, how to produce and for whom to produce are made by the government.
(b) Features of capitalist economy;
i. there is private ownership of resources;
ii. production decisions are taken mainly by private individuals and organizations;
iii. capital is provided by private individuals and organizations;
iv. there is the profit motive;
v. there is very limited government participation in economic activity.
5. (a) Define mobility of labour.
(b) Describe any four factors influencing the supply of labour.
ANS: (b) i. the size of the population;
ii. age distribution of the population;
iii. working hours;
iv. certain beliefs /practices;
v. level of wages;
vi. number of public holidays;
vii. official retirement age.
6. (a) Define money.
(b) State the three motives for holding money.
(c) Mention two determinants of each of the motives for holding money.
ANS: Transactions motive
(i) size of income;
(ii) interval between wage payments;
(iii) availability of credit;
(iv) family size.
Precautionary motive
(i) size of income;
(ii) interval between wage payments;
(iii) availability of credit;
(iv) perception of risks.
Speculative motive
(i) the rate of interest;
(ii) the degree of risk aversion.
7. (a) With the aid of a diagram, explain a minimum price.
(b) State any five measures by which a minimum price for an agricultural produce can be made effective.
8. (a) What is a supply schedule?
(b) Using an example, show how a market supply schedule of a product is obtained from individual supply schedules.
(c) State three examples of exceptional demand.
ANS: (c) Exceptional demand:
i. Fixed demand or perfectly inelastic demand e.g. salt
ii. Perfectly elastic demand
iii. Expectation of future increase in price.
iv. Articles of ostentation.
v. Giffen goods.
9. (a) With examples, distinguish between direct and indirect tax.
(b) Explain any four problems of tax collection in any West African Country.
ANS: (a) A direct tax is a tax on incomes and properties. Examples include persona income tax, company tax, death duties, inheritance tax, capital gains taxes, etc.
Whereas, an indirect tax is tax on goods and services. Examples include sales tax, import and export duties, excise tax, purchase tax, value added tax, etc.
(b) (i) absence of reliable records of business activities and revenues collected.
(ii) the prevalence of subsistence production.
(iii) corruption on the part of tax officials.
(iv) high level of tax evasion and tax avoidance etc.
10. (a) What is demographic transition theory ?
(b) Explain the three stages of the theory.
ANS: (a) Demographic Transition Theory is concerned with the historical population growth of society. It explains the relationship between fertility and mortality on population growth and how developed countries in contemporary times have passed through three identical stages of population history.
(b) Stages of the Theory;
stage 1 (pre-transition phase/ stage)
stage 2 (transition phase/ stage)
stage 3 (post transition phase /stage)
11. (a) Differentiate between shares and debentures.
(b) Identify any four problems encountered by farmers in raising capital
ANS: (a) A share is the smallest unit into which the capital of a company is divided. It is a unit of ownership of a business concern while a debenture is a loan capital or corporate bond. A debenture holder is a creditor to a company.
(b) (i) low level of loanable funds;
(ii) inability of firms to produce the required collateral facilities;
(iii) under-developed money and capital markets;
(iv) high cost of loans;
(v) fluctuation of share prices;
(vi) Government financial regulation.
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