ARSMER FOR TEACHERS’ USE ONLY ECON 2000 Alternative answers are acceptable so long as they are well reasoned. Section A 1. E.g, The ice-field in the Polar regions is a free good because the quantity available is sufficient to satisfy all our wants for it / no sacrifice of resources of the economy is involved / any appropriate explanation E.g, Ice cubes in a glass of soft drink are economic goods because the quantity available is insufficient to satisfy all our wants for it / one has to pay a cost to obtain it / any appropriate explanation 2. David refers to the law of demand’ downward sloping demand curve/a movement along a normal demand curve. Unit Price = a Indicate in the graph = downward sloping demand curve = arise in price and a corresponding decrease in the quantity demanded 2000-CE-ECON 1-2 RARAMEH FOR TEACHERS’ USE ONLY MarksARAMEA FOR TEACHERS’ USE ONLY Alternative answers are acceptable so long as they are well reasoned. 2. Amy refers to a change in demand/an increase in demand/a shift of the demand curve/a ‘change in the equilibrium position due to an increase in demand Unit Price Ds Quantity ae Indicate in the grapt: = rightward shift of demand curve 1 ‘an inerease in the equilibrium price 1 ‘an inerease in the equilibrium quantity 1 3. itis man-made and it provides services. 2 4, The law states that when variable factors are added continuously to tie fixed factors, (holding technology constant), the marginal product will eventually decrease. 3 ‘The marginal product calculated is shown below: AP. MP. 30 34 a 3 37 61 39 37 40 50. ‘The data illustrate the law of D.MP. ARAMEH FOR TEACHERS’ USE ONLYARAMESH FOR TEACHERS’ USE ONLY 5 Alternative answers are acceptable so long as they are well reasoned. 5, Money is a generally accepted medium of exchange. 2 Pi The problem of exchange in the case is the need to search for double coincidence of wants/the act of buying and the act of selling cannot be separated. If money is used as a medium of exchange, A can pay money to buy B's vegetables 2 without selling his bananas to B. B can also pay money to buy wood from someone other than A. With money, exchange can take place even if there is no double coincidence of wants/the act of buying and the act of selling can be separated. 6. @) Recession, 1 ~ -ve GDP growth rate / GDP or output decreases. 1 = increasing unemployment rate = falling cost of living, (Mark the FIRST THREE points only.) (8) For the same amount of money income, real income rose as price level decreased. 3 2000-CE-ECON 1-4 RRAGS FOR TEACHERS’ USE ONLYAPRAADS ER FUR TEAURERS Vor ONLY Alternative answers are acceptable so long as they are well reasoned. 7. The no, of unemployed increases at a slower rate than the increase in the labour force. 4 [see meme mente Se rn | without other elaboration : Max. 1 mark 8. Correct comparison of the amount of money rebated to the high-income group and the low income group Eg. High-income taxpayers were rebated a larger amount of money than low-income 3 taxpayers Eg.2 The government rebated money to the taxpayers but no money tothe poor who were non-taxpayers. It results in a wider wealth gap. 1 Effective communication mark for Section A. max :2 2000-CE-ECON 1-5 RRAME FOR TEACHERS’ USE ONLYRRARER FOR TEACHERS’ USE ONLY Section B Marks 9. (a) (A regressive tax is a tax which tax rate decreases as income increases. Consumers pay the same amount of gasoline tax for purchasing the same amount of gasoline, => in proportion to individual's income, the richer pay at a lower tax rate while the poorer pay ata higher tax rate 3 gasoline tax isa regressive fax. = asource of tax revenue 2@, ~ any other relevant economic reason max 4 Gi) ~ to reallocate resources : use more public transport but less private transport ] on [Mark the FIRST TWO points only] ©) @ substitute is available =pi Plagt Td ‘The Petroleum Market Unit Price Quantity Indicate in the graph - pd 1 = PQ reduces to PQ” 2000-CE-ECON 1-6 RRAGER FOR TEACHERS’ USE ONLYARAMEH FOR TEACHERS’ USE ONLY Alternative answers are acceptable so long as they are well reasoned. 9. (b) (ii) Smuggled gasoline has no official record in the GDP figures «illegal (on the other hand,) sales of petroleum companies 4 app 4 (©) Oligopoly. a few dominating firms interdependence rnon-price competition price leadership any other relevant point Effective communication 2000-CE-ECON 1-7 ARAME FOR TEACHERS’ USE ONLY max:2 Total : 25,RRAREH FOR TEACHERS’ USE ONLY Alternative answers are acceptable so long as they are well reasoned. Marks 10. (a) Answer 1 ( Assume that the public does not use the $ 50 mn cash in hand to repay bank loans when the banks call back loans due tothe withdrawals ) (@® $10 mnx 1/200/1000) 2 = (810 mn) +(- $50 mn) 2 =~$40 mn/a contraction of $ 40 mn 1 2000-CE-ECON 1-8 FAPRANEH ERY == FOR TEACHERS’ USE ONLYRRAMEH FOR TEACHERS’ USE ONLY Alternative answers are acceptable so long as they are well reasoned. 10, (©) (Horizontal integration 1 they are doing the same or similar businesses. 1 Elaboration of 3 of the following: ~ financial economies of scale = managerial economies of scale + spread risk = research and development = any other relevant point, (Mark the FIRST THREE points only.] Gi) (Opportunity cost is the highest-valued option forgone. 2 forgone. .". The hidden debt has nothing to do with the opportunity cost of the (I) (Wo.) The shares of Bank Y bought by Bank X is the chosen option, NOT the option ] take over. Gil) (No.) ‘The $5 mn. refers to the value of shares being transferred and share transfer itself is not production, 3 Effective communication max :2 Total : 25 2000.CE-BCON 1-9 ARAMEH FOR TEACHERS’ USE ONLYARASH FOR TEACHERS’ USE ONLY Alternative answers are acceptable so long as they are well reasoned, Marks 11 (County A can prose (1200.4) itso win oF (90006 on of tating County ean produce (4094) ans of wie o (4000.6 unis of lting {Abs lower oppor eat compantive avant in wine production i SiReapors wie 1 (i) No county wl gin whe the tansoration cot per ni wine ta gino de per uit ofwine/ ieee ath we donee oppor co 2 min wasporson con = (4-12) 31 wis ofloting 2 2000-CE-ECON 1-10 ARABS FOR TEACHERS’ USE ONLYRRAMER FOR TEACHERS’ USE ONLY Alternative answers are acceptable so long as they are well reasoned, 1. @) st Demand is inetastic % 1 in wage > % * in employment Wage rate Quantity of labour Indicate in the graph ~ SS (local people) shifts rightward to $°S" (local + immigrants) -W F (©) Output per unit of labour or output per man-hour = better education / training, = better capital = better technology = better management = better working conditions = any other relevant point [Mark the FIRST THREE poi Effective communication 2000-CE-ECON I-11 BRAXBHBY FOR TEACHERS’ USE ONLY 1@, max? 3 max: 2 Total : 25