PAPER 2
[80 marks]

Answer four questions in all. One question only from Section A and any three questions from Section B.



You are reminded of the importance of clarity of expression and
orderly presentation of relevant materials.


All questions carry equal marks.



SECTION A

Answer one question only from this section.


  1. (a)    Figure 1 below shows the imposition of tax on the sellers of a product. Study the graph and answer the questions that follow.

    Figure 1

    (a) Identify the price per unit of the product:

        (i) before tax;
          [2 marks]

        (ii) after tax.
          [2 marks]

    (b) What is the quantity demanded and supplied:

        (i) before tax;
          [2 marks]

        (ii) after tax.
          [2 marks]

    (c) Determine the amount:

        (i) of tax imposed per unit of the product;
          [2 marks]

        (ii) retained per unit by the sellers after tax.
          [2 marks]

    (d) Calculate the percentage of the total tax imposed that is:

        (i) paid by the buyers per unit; ;
          [4 marks]

        (ii) paid by the sellers per unit.
          [4 marks]


  2. A public transport company recently increased the price of its service on a particular high traffic route from $ 12 to $ 15 per trip, this resulted in a reduction in the number of commuters from 600 to 580 per day. Use the information above to answer the questions that follow.

    (a) Calculate the:

        (i) percentage increase in the price Of its service; ;
          [ marks]

        (ii) percentage decrease in the number of commuters;
          [ marks]

        (iii) coefficient of price elasticity of demand for its service.
          [8 marks for i, ii, & iii]

    (b) Is the demand for the company's transport service price elastic or inelastic? Give a reason for your answer.
    [2 marks]

    (c) What is the effect of the increase in the price of its transport service on the company's revenue? Give a reason for your answer.
    [6 marks]

    (d) From your answers in 2(a)(iii), is it rational for the transport company to increase the price of its service in order to increase revenue? Explain your answer.
    [4 marks]


  3. SECTION B

    Answer three questions only from this section.


  4. (a) Explain how inflation can lead to unemployment.
    [4 marks]

    (b) Other things being equal, an increase in demand will cause equilibrium price and quantity to rise. With the aid of diagrams, explain the extent of this rise when supply is:

        (i) fairly elastic; ;
          [8 marks]

        (ii) fairly inelastic.
          [8 marks]

  5. (a) Distinguish between a monopoly and monopolistic competition.
          [6 marks]

    (b) Describe how the downward sloping demand curve of a monopolist limits his monopoly power.
          [5 marks]

    (c) Explain how the following factors influence the price in a perfect market:

        (i) homogeneity of products sold;
          [3 marks]

        (ii) large number of buyers and sellers;
          [3 marks]

        (iii) perfect knowledge;
          [3 marks]

  6. (a) Define labour.
          [2 marks]

    (b) Differentiate between division of labour and efficiency of labour.
          [6 marks]

    (c) Outline four ways in which a Chief Executive Officer of a company can make his employees more efficient.
          [12 marks]

  7. Import substitution strategy has been adopted by many West African countries to bring about industrialization and reduce reliance on imports. In view of the above statement,

    (a) define industrialization;
          [2 marks]

    (b) other than import substitution, explain any two strategies that can be adopted to reduce reliance on imports;.
          [6 marks]

    (c) outline any four measures that can be adopted to increase the Volume of exports in any country.
          [12 marks]

  8. (a) Define economic growth.
          [2 marks]

    (b) Explain any three roles performed by commercial banks to aid economic growth.
          [9 marks]

    (c) Outline any three functions of the capital market in promoting economic growth.
          [9 marks]

  9. (a) Define economic integration.
          [2 marks]

    (b) Explain the following forms of integration:

        (i) free trade area;
          [3 marks]

        (ii) customs union;
          [3 marks]

        (iii) economic union.
          [3 marks]

    (c) Outline any three problems that prevents the Economic community of West African States (ECOWAS) from functioning effectively.
          [9 marks]


END OF PAPER

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