"In some markets it is relatively easy to separate customers into groups by identifying which buyers have elastic demands and which buys have inelasti

Section A

  1. "In some markets it is relatively easy to separate customers into groups by identifying which buyers have elastic demands and which buys have inelastic demands. For example, in case of movie tickets; working adults tend to have the less elastic demand for many reasons, including higher incomes and less available to go to the movies. It is easy to separate movie goers into groups simply by looking at their identities: children, students and senior students can be identified and the qualified for the discount ticket price. The firm that price determinates must also be able to prevent the lower price group from buying low and reselling to higher price group at less than the price the firm will charge. Ideally, a firm will like to charge the price each buyer is willing and able to pay for each unit of the output". i) Define price discrimination.  ii) What technical term is used to to define the underlined phrase. b. i) List two circumstances that will likely make price discrimination profitable. ii) Enumerate three types of price discrimination. c.i) Outline two benefits of price discrimination to consumers. ii) State two harmful effects of price discrimination to the society. d) Identify the type of price discrimination mentioned in the last sentence of the passage and illustrate with a diagram how it can profitably be used by  a loss-making firm.
  2. There are a variety of economic system operating in the world. These can be categorized into command economies, laissez-faire economies and a combination of the two, mixed economies. Source: Adapted from Stanlake's introductory Economics, S.j. Grant, 7th Edition, (page 20). a) Enumerate the features of each of : i) The laissez-faire economy. ii) The command economy. b) State i) Three benefits of the laissez-faire economy. ii) Three advantages of the command economy. c) Give one example of a command economy in the world world today. 
  • Table 1 shows the output of cocoa and wool in the two countries, A and B. Before specialization and trade, the countries have the same amount of resources 
  • Table 1 
    Country                                   Cocoa( tons)                                Wool(bales)
    A                                                 100                                               50
    B                                                  50                                                100
    World                                          150                                               150

    a. i) With the aid of a table show how the world's out put has increased after specialization.  ii) From Your answer to a(i) above, deduce three disadvantages of specialization.  b) Now, the situation of country A before and after specialization is presented in the figure below.
    c. i) Determine the terms of trade between A and B. ii) What does the area VZX represent? iii) After specialization and trade, what is the level of consumption, export and imports in  country A? 


    Section Two

    1. Resources and raisin the national debt. After all government has a Mershal plan for Cameroon as the economy is expected to become an emerging one by the year 2035. Source: Adapted from marketing essentials by Lis Schnieder Farese, Grady Kimbrell Sand Carl A, Woloszyk. Define the term a. i) The budget. ii) Economic growth. b) List four advantages of economic growth. c) The national debt can be used for reproductive purposes or it can be dead weight. Explain  d) Define the term the burden of the national debt and list two ways in which this burden can be reduced. e) List four other sources of government revenue not mentioned in the passage.
    1. Table below presents hypothetical figures on a given economy for a period of four years  
    Table 2
    Year      national income(million CFA)  Price index   Population
    1                        5000                                80                   50
    2                        8000                                100                 40
    3                        12000                              125                 60
    4                        20000                              160                 58

    a. For all the years. Calculate ; i) The per capita national income. ii) The real national income. iii) The per capita real national income. b) What do you understand by i) Money national income? ii) Real national income? c. i) Give five reasons why money national income is not a good indicator of social well being of the population. ii) What then can we use to indicate the social welfare of the population?
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