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ECON P1 s

ECON P1 s

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Published by: api-3700197 on Oct 14, 2008
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03/18/2014

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KIKAAYA COLLEGE SCHOOL
END OF TERM 1 EXAMS 2008
ECONOMICS P220/1
PAPER ONE S.6
TIME: 3 HOURS
INSTRUCTIONS:

Answer four questions in all
Section A is compulsory: answers to this section should be concise and
precise
Answer three questions from section B

SECTION A (40 marks)
1. (a) (i) What is meant by opportunity cost.
(1mk)
(ii) Outline any three merits of opportunity cost concept to
the producer
.(3mrks)
(b) (i) Distinguish between market price and equilibrium price. (2mks)
(ii) Give any two uses of price in an economy. (2mks)
(c) (i) Distinguish between composite demand and derived demand. (2mks)
(ii) Mention any two commodities with composite demand.
(d) (i) Distinguish between labour demand and labour efficiency. (2mks)
(ii) Mention any two limitations of labour efficiency in an economy.(2mks)
(e) (i) Distinguish between vertical merging and horizontal merging
of firms.
(2mks)
(ii) Outline any two limitations of firm merging in an economy. (2mrks)
(f) (i) Distinguish between explicit costs and implicit costs.
(2mks)
(g) Study the table below and answer the questions that follow.
Income
Quantity demanded of
commodity x
10,000
5kgs
25,000
2kgs
(i)
Calculate income elasticity of demand for commodity x. (2mks)
(ii)
What type of commodity is x and why? (2mks)
(h)(i) What is meant by investment multiplier? (1mk)

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