PRESIDENT’S OFFICE

REGIONAL ADMINISTRATION AND LOCAL GOVERNMENT

FORM SIX COMPETENCE EXAMINATIONS (FOSCE) 2023

151/1 ECONOMICS 1
Time: 3:00 Hours 17th February 2023, PM

Instructions:

1. This paper consists of sections A, B and C with a total of eight (8) questions.
2. Answer all questions in section A and two (2) questions from each sections B and C.
3. Section A carries twenty (20) marks and sections B and C carry forty (40) marks each.
4. Non programmable calculators may be used.
5. All communication devices and any unauthorized materials are not allowed in the
examination room.
6. Write your Examination Number on every page of your answer booklet(s).

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FOSCE 2023 ` ECONOMICS 1

 SECTION A
Answer all questions from this section
1. Under what circumstances is a nation said to be living on its capital? Give five (5) points

2. Theories of trade cycles are very useful in explaining the emergence of economic
instabilities. Justify this view by using five (5) points.

SECTION B
Answer two (2) questions from this section
3. (a) Given the demand and supply schedule below.
Price (Tshs) Quantity demanded (tons) Quantity supplied (tons)
1 130 80
2 100 100
3 70 120
4 40 140
5 10 160
Required:
i. Use the information given in the table above to derive the algebraic equation
for demand and supply.
ii. Sketch the graph for demand and supply and indicate the equilibrium point.
(b) Analyse five (5) factors affecting price elasticity of demand.

4. Study the production possibility curve below and then answer the questions that follow.
Good Y

A
B E

C
Good X
a) Explain economic implications of points A, B, C, D and E.
b) What factors can enable this economy to produce at point E?. Give three (3)
points

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FOSCE 2023 ` ECONOMICS 1

 c) Explain the four (4) circumstances that may compel this economy to produce at
point D.
d) Comment on the shape of the production possibility frontier above.
5. (a) Given the diagram below:-
Revenue &Costs
MC AC

A
P

C
B
M

AR
MR

0 q1q2 Quantity of output

i. Identify the profit maximizing output and price.

ii. Indicate output at the optimum size of the firm.
iii. Does this firm make profit or loss? Give reason.
iv. What market structure is depicted by the figure above?
v. With reason state the relationship between AR and MR.

(b) TANESCO is the sole supplier of electricity in your country. It supplies electricity to
two separate consumers namely industrial (or commercial) users and domestic users
at different tariffs. Suppose that TANESCO’s total cost of producing electricity is
given by the equationC = 50 + 20Q WhereC = Total cost in Tshs, and Q = Total
output of electricity produced.The demand functions for the two consumers are given
as follows:-

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FOSCE 2023 ` ECONOMICS 1

 P1 = 80-5Q1
P2 = 180 -2Q2
Where;
P1 = Tariff charged to domestic users
Q1 = Output sold to domestic users
P2 = Tariff charged to commercial users
Q2 = Output sold to commercial users
Required:
i. The output produced and how much of this output will be sold in each market.
ii. At what price will the outputs in each market be sold?

SECTION C
Answer two (2) questions from this section

6. Account for the usefulness of privatization policy in bringing economic transformation of

the third world countries like Tanzania. Give six points.

7. Explain six measures that an economy may adopt to combat demand pull inflation.

8. Africa’s high birth rate is keeping the continent poor. Prove on this statement by
providing six points.

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FOSCE 2023 ` ECONOMICS 1