- 20 Marks
EIB – APR 2023 – L1 – Q1 – Scarcity, Choice, and Marginal Utility
Explain why economics involves choice under scarcity, identify economic friction forces, define wants, and apply marginal utility to scenarios involving price falls, free water collection, and advertisement impacts.
Question
a) Briefly explain why Economics is said to be the study of choice under conditions of scarcity. (4marks)
b) Name two forces that create economic friction. (4marks)
c) Define the term “wants” (4marks)
Use the concept of marginal utility to answer questions (d) to (f)
d) What happens to marginal utility when price falls?
(3marks)
e) Explain why Kofi can fetch water from a nearby stream without paying money for the water he collects. (3marks)
f) Explain why an effective advertisement of a given commodity often leads to an increase in price of that commodity. (2 marks)
(Total marks:20)
Find Related Questions by Tags, levels, etc.
- Tags: advertisement effects, choice, economic friction, free goods, marginal utility, price changes, scarcity, wants
- Level: Level 1
- Topic: Price and Output - The Commodity/Industry and the Market
- Series: APR 2023
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