PAPER 1

1. a) (i)Distinguish between average product and marginal product
(ii)State any two factors that may lead to an increase in marginal product of labour


(b) (i)What is meant by a mixed economy?
(ii)Give any three merits of a mixed economy

(c) Given that an increase in the price of commodity X from shs 1500 to shs 1800 resulted into change in quantity demanded for commodity Y from 600 units; calculate the cross electricity brand.
(ii)state the relationship between commodities X and Y

(d) (i)Define the term regressive tax
(ii)State any three effects of regressive taxes in an economy

(e) (i)state Irying Fisher’s equation of exchange

(ii)How is the value of money determined in fisher’s equation of exchange?

2. (a)Why do prices of agricultural products fluctuate
(b)What are the effects of agricultural price fluctuations in an economy?

3. Define the term ‘’nationalisation of enterprises’’
(b)Explain the merits and demerits of nationalization of enterprises in an economy.

4. Explain the differences and similarities between pure monopoly and monopolistic competitive markets
(b)How does the existence of monopolistic competitive markets affect producers in your country?

5. (a)What are the features of an economic union?
(b)Explain the factors that limit regional economic integration among the development countries

6. What is meant by centralized planning?
(b)Explain the rationale for centralized planning in an economy

7. (a)State the Malthusian population theory

(b)Explain five ways in which the Malthusian population theory is relevant to developing countries

(c)state six limitations of the theory