1. a. what are the effects of shifts in demand and supply on market prices and quantities? Use supply and demand diagrams to verify your answers.
b. i) describe four methods of measuring price elasticity of demand.
ii) list four factors that determine price elasticity of demand
c. how would the following changes in price affect total revenue?
That is, would total revenue increase, decline or remain unchanged?
i) Price falls and demand is inelastic
ii) Price rises and demand is elastic
iii) Price rises and demand is inelastic
iv) Price falls and demand is elastic
v) Price falls and demand is of unit elastic
d) suppose a university raises its tuition from US $ 3000 to US $3500. As a result, student enrollment falls from 5000 to 4500. Calculate the price elasticity of demand. Is demand elastic, unitary elastic or inelastic?2. a) ‘money can only be defined in terms of its function.’ Discuss
c) why do people hold money when they can earn interest by lending it to others or buying interest yielding bonds of the companies?
d) Through which instruments does the central bank control money supply?
3. a) list three barriers to trade.
b) outline five arguments in favor of trade restrictions.
c) Explain the rationale behind regional integration.
4. a) discuss the main reasons why an economy needs a public sector.
b) using relevant examples distinguish between positive and negative externalities.
c) outline the alternative methods of dealing with (correcting) externalities.
5. the following hypothetical data relate to an imaginary African country.
GNP- 8000000
Depreciation- 100000
Indirect business taxes- 80000
Gross investment- 400000
Total population- 30000
Consumption- 10000
Personal income taxes- 800
Excise duty- 80
Personal income- 89000
Calculate:
i. Net national product
ii. GNP per capita
iii. Net investment
iv. Disposable personal income
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