SS2 ECONOMICS

EXAMINATION
REVISION
 Question 1
Monetary policy is primarily concerned with:
• A. Regulating government spending
• B. Controlling the money supply and interest rates
• C. Reducing subsidies
• D. Supporting the agricultural sector
Question 2
Supply-side policies are designed to:
• A. Increase aggregate demand
• B. Reduce production capacity
• C. Increase the efficiency of resource allocation and production
• D. Decrease government intervention in the economy
Question 3
The interest rate is an important tool for:
• A. Regulating government spending
• B. Influencing consumer spending and investment
• C. Controlling inflation
• D. Managing international trade agreements
Question 4
Agricultural policy may include measures to:
• A. Increase urbanization
• B. Support farmers through subsidies and price controls
• C. Reduce the production of agricultural goods
• D. Encourage imports of agricultural products
 Question 5
Fixing the product price below the equilibrium price is a feature of _____
• A. Maximum pricing
• B. minimum pricing
• C. price floors
• D. equilibrium pricing
Question 6
Which of these wouldn’t be a disadvantage of similar firms located in
an area?
• A. Rising rental costs
• B. Rising wages within the area
• C. Communication problems
• D. Congestion and competition
Question 7
A scenario where a wheat farm merges with a bakery is an example of _
• A. forward integration
• B. horizontal integration
• C. backward integration
• D. internal growth
Question 8
How would increasing income tax affect the equilibrium position in the
market?
• A. Decrease in both price and quantity
• B. Increase in both price and quantity
• C. Decrease in price and rise in quantity
• D. None of the above
Question 9
Commercial farming is focused on:
• A. Providing food for the farmer's family
• B. Selling surplus produce for profit
• C. Subsistence agriculture
• D. Sustainable farming practices
Question 10
Plantation farming is commonly associated with the production of:
• A. Diverse range of crops
• B. Cash crops such as tea, coffee, and rubber
• C. Staple food crops
• D. Livestock and dairy products
Question 11
Peasant farming is often characterized by:
• A. High level of mechanization
• B. Use of hired labour
• C. Reliance on family labour
• D. Emphasis on monoculture
Question 12
Commercial farming is more prevalent in:
• A. Urban areas
• B. Developed countries
• C. Subsistence farming regions
• D. Small rural communities
Question 13
Plantation farming requires:
• A. Intensive labour
• B. Minimal investment
• C. Small landholdings
• D. Limited use of fertilizers and pesticides
Question 14
Peasant farming is typically aimed at:
• A. Maximizing profits
• B. Providing food for the local community
• C. Exporting crops to international markets
• D. Meeting the needs of multinational corporations
Question 15
The price of a product has a ______ relationship with the quantity
demanded.
• A. neutral
• B. positive
• C. negative
• D. Central
Question 16
An increase in the price of bread would lead to a/an
• A. an increase in the demand for butter
• B. a decrease in the price of butter
• C. a decrease in the demand for butter
• D. an increase in the demand for bread
Question 17
A car retailing outlet merging with a car assembling firm is an example
of
• A. Internal growth
• B. Backward integration
• C. Economies of scale
• D. Forward integration
Question 18
Food and water are basically _____
• A. Necessities
• B. luxury products
• C. wants
• D. articles of ostentation
Question 19
An increase in the cost of production, would lead to _______
• A. increase in demand
• B. increase in supply
• C. decrease in supply
• D. decreased demand and supply
Question 20
When a business enjoys economies of scale
• A. Average costs fall
• B. Total costs fall
• C. Average costs rise
• D. Price of products increase
1. B
2. C
3. B
4. B
5. A
6. C
7. C
8. C
9. B
10.B
11. C
12. B
13. A
14. B
15. C
16. C
17. D
18. A
19. C
20. A
THEORY
• Analyse five differences between a perfect market and an imperfect
market. (20 Marks)
Perfect Competition vs. Imperfect Competition:

• In a perfect market, perfect competition prevails, meaning there are

many buyers and sellers, all selling identical products, with no barriers
to entry or exit. Each firm is a price taker, meaning it cannot influence
the market price.
• In an imperfect market, imperfect competition exists. This includes
monopolistic competition, oligopoly, and monopoly. In these markets,
there may be a small number of large firms (oligopoly), differentiated
products (monopolistic competition), or only one dominant firm
(monopoly). Firms in imperfect markets have some degree of market
power and can influence prices.
Price Determination:
• In a perfect market, prices are determined solely by supply and
demand forces. No individual buyer or seller can influence the market
price.
• In an imperfect market, prices can be influenced by factors such as
the degree of market power held by firms, production costs, and
barriers to entry. Firms may have some control over prices, either by
setting them directly or by adjusting production levels.
Product Differentiation:
• In a perfect market, products are homogeneous, meaning they are
identical and indistinguishable from one another. Consumers have no
preference for one seller's product over another.
• In an imperfect market, products may be differentiated, meaning they
have unique features or characteristics that distinguish them from
competing products. This allows firms to have some degree of pricing
power and potentially charge higher prices based on perceived
differences in quality or branding.
Barriers to Entry:
• Perfect markets have no barriers to entry or exit. New firms can freely
enter the market and existing firms can exit without facing any
obstacles.
• Imperfect markets often have significant barriers to entry, such as
high startup costs, government regulations, patents, or economies of
scale. These barriers limit the ability of new firms to enter the market
and compete with existing firms, resulting in less competition and
potentially higher prices for consumers.
Information Transparency:
• Perfect markets are characterized by perfect information, where
buyers and sellers have complete knowledge about prices, product
quality, and production costs. This ensures that all market participants
can make well-informed decisions.
• Imperfect markets may have asymmetrical information, where one
party has more information than the other. This can lead to situations
where firms exploit consumers by offering inferior products at higher
prices or engaging in deceptive practices.