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Economics Past Papers

The document outlines various economic concepts including the roles of households, firms, and government, as well as scarcity and opportunity cost. It discusses market dynamics such as supply schedules, price elasticity of supply, and the implications of shortages and surpluses. Additionally, it covers barriers to entry in industries, investment expenditure, GDP calculations, protectionism, and the advantages of economic integration.

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Eliza Singh
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8 views6 pages

Economics Past Papers

The document outlines various economic concepts including the roles of households, firms, and government, as well as scarcity and opportunity cost. It discusses market dynamics such as supply schedules, price elasticity of supply, and the implications of shortages and surpluses. Additionally, it covers barriers to entry in industries, investment expenditure, GDP calculations, protectionism, and the advantages of economic integration.

Uploaded by

Eliza Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MAY/JUNE 2022

Question 1
(a) i. 1) Household
2) Firms
3) Government
ii. The household’s role is to be able to satisfy their needs and wants by consuming
goods and services and they are the owners of factors of production. The firms are the buyers
of the services of factors of production and the producers of goods and services. The
government taxes individuals and firms and so obtains a large percentage of revenue, which
is used to finance government expenditure.
(b) i. Scarcity is when our resources like money and natural resources are limited while
human wants are infinite and to satisfy human wants and needs and this is when this
becomes an economic problem, when humans have to make an economic choice,
known as opportunity cost.

ii. Opportunity cost is when something must be forgone to obtain something else
whereas money cost is when a monetary value is attached to something like a good or
service.

A When Good Y is being produced at its highest at


B
Good point A, good X is not being produced. Movement
C from one point to another on the Production
Y
Possibility Frontier demonstrates the opportunity
D
cost of choosing to produce more of one good
over the other. At point F, Good Y is not being
E
produced whereas Good X output is being
produced at its highest optimum.
F
0
Good X
Question 2
(a) i. Market is a place where buyers and sellers come together to exchange goods and
services.
ii. Supply schedule is a table showing the quantity of a good or service that the firm is
willing to supply at various price.

(b) 1) Decrease in cost of production.


2) Increase in technology advancements.

(c) i. PES= Percentage change in Quantity Supplied


Percentage change in Price
50-10 x 100 = 400% 4-2 x 100 = 100%
10 1 2 1

PES= 400 = 4
100

ii.
S
Price

0 10 30 50 Quantity

(d) i. When there is the greatest shortage of pens in the market quantity demanded
exceeds quantity supplied and this occurs at the price of $1. At this price, consumers
demand 50 pens, but suppliers provide 0 pens, resulting in a shortage of 50 pens.

ii. When there is the greatest surplus of pens in the market, quantity supplied exceeds
quantity demanded and this occurs at the price of $4. At this price, suppliers provide
50 pens, but consumers demand for 0 pens, resulting in a surplus of 50 pens.
Question 3

(a) i. 1) High start-up costs


2) Legal and regulatory barriers
3) Strong brand loyalty and economies of scale.

ii. The time period in which firms can enter or leave an industry is in the long run.

iii. Monopoly and Oligopoly.

(b)
Price

0 Quantity

(c) 1) If a firm operates in an industry that requires large initial investments, such as
expensive machinery or infrastructure, allowing existing firms to maintain their
market position, change higher prices, and possibly earn long-run economic profits.

2) If consumers strongly prefer a well-established brand, new firms may struggle to


attract customers. This reduces competition, helping the existing firm maintain
demand for its products and sustain profits or normal equilibrium over time.
Question 4

(a) i. Capital consumption also known as, depreciation refers to the reduction of value in
the value of a country’s or firm’s capital over time.

ii. Investment expenditure refers to the spending on capital goods such as machinery,
equipment, infrastructure and buildings that are used to produce goods and services.

iii. Disposable income is the amount of money an individual or household has left
after deducting taxes from their total income.

(b) i. Income Method= Wages + Rent + Interest = Profit


Wages 65.00
Rental Income 75.00
Interest Income + 150.00
Business Profits 200.00
490.00

ii. The expenditure Method


$
Consumption (c) 300.00
Investment (I) 120.00
Government spendings 150.00
Net exports 50.00
GDP at market prices $620.00
Indirect taxes (75.00)
Subsidies --------
GDP at factor cost $555.00

(c) i. Country B. This is because Country B have a higher annual percentage in GDP
(5%) compared to Country A (3%). This means that Country B’s economy is growing
at a faster rate, which is a key indicator of higher economic growth.
Question 5

(a) i. Protectionism is a policy of restricting international trade to protect our domestic


industries from foreign competition and thus combat the disadvantages of
international trade.

ii. Structural adjustment refers to economic policies implemented by governments,


often with guidance from international financial institutions, aiming to stabilize and
restructure an economy, typically be reducing government spending. An example is
Jamaica’s structural adjustment program in the 1980s, where the government reduced
subsidies.

(b) Two advantages of economic integration to a country are that they allow countries to
trade more freely with each other, reducing tariffs and other barriers. This leads to
greater access to a larger market, boosting exports and economic growth and it creates
a more stable and attractive environment for foreign investors. Companies are more
likely to invest in countries within a trade bloc because they gain access to multiple
markets with fewer restrictions.

(c) Limited access to the internet. FDI can allow foreign companies to invest in a
country, bringing advanced technology.

Limited Knowledge on technology. FDI can allow foreign companies to invest in a


country by setting up training centers with universities to teach digital and technical
skills.
JANUARY 2022

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