Topic: Price and Output - The Commodity/Industry and the Market

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  • 20 Marks

EIB – APR 2023 – L1 – Q2 – Demand, Supply, and Elasticity Assumptions

List assumptions in demand analysis, reasons for increased consumption with rising income, determinants of maize supply, and commodities with inelastic supply.

a) Name any three economic assumptions made while analyzing demand (6 marks)

b) Name any three reasons which normally induce a consumer to buy more units of a commodity as his income rises. (6 marks)

c) State any three determinants of supply of maize. (6 marks)

d) Name any two commodities whose supply is fairly inelastic. (2 marks) (Total marks:20)

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  • 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.

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)

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  • 20 Marks

EIB – APR 2024 – L1 – Q2 – Demand and Supply of Cocoa

Calculates cocoa equilibrium with given functions, assesses coffee price impact, diagrams shifts, explains supply relationship.

Cocoa and Coffee are common cash crops in Ghana. The knowledge of their Demand and Supply is crucial for national development. Assume the Demand and Supply functions of Cocoa are given as $Q^d=12-p$ and $Q^s=9.6+0.5 p-0.2 p_c$ respectively. Where $Q^d$ is Quantity Demanded and $Q^s$ is Quantity Supplied of Cocoa, $p$ is the Price of Cocoa and $p_c$ is the Price of Coffee. (a) Determine the Equilibrium Price and Quantity of Cocoa if $p_c=\mathrm{GHC} 3.00$. [6 marks]

(b) Determine the new Equilibrium Price and Quantity of Cocoa if the price of Coffee increases from its original price of $p_c=\mathrm{GHC} 3.00$ to $\mathrm{GHC} 6.00$. [6 marks]

(c) Represent the solutions in $a$ and $b$ above with a diagram. [6 marks]

(d) Explain whether Cocoa and Coffee have Joint, Composite or Competitive Supply.[2 marks]

(Total: 20 marks)

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  • 20 Marks

EIB – APR 2024 – L1 – Q1 – Supply of Commodity and Economic Systems

Defines supply, explains wage impact on supply, defines economic system, reasons for Ghana as mixed economy, calculates elasticity.

(a) What is meant by supply of a commodity? [4 marks]

(b) Assume that Mont Richeon Ltd. manufactures concrete blocks for sale. Explain the effects of an increase in Minimum Wage on the supply of blocks from Mont Richeon. [4 marks]

(c) Explain the term Economic System. [4 marks]

(d) Give two (2) reasons why Ghana can be classified as a Mixed Economic System. [4 marks]

(e) The Interest Rate of a bank increases from $20 %$ pa to $40 %$ pa. As a result, demand for loans decreases from $\mathrm{GHC} 200,000.00$ to $\mathrm{GHC} 150,000.00$. Calculate the Interest Rate Elasticity of Demand for loans and interpret your answer. [4 marks]

(Total: 20 marks)

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  • 20 Marks

EIB – APR 2023 – L1 – Q2 – Demand, Supply, and Elasticity Assumptions

List assumptions in demand analysis, reasons for increased consumption with rising income, determinants of maize supply, and commodities with inelastic supply.

a) Name any three economic assumptions made while analyzing demand (6 marks)

b) Name any three reasons which normally induce a consumer to buy more units of a commodity as his income rises. (6 marks)

c) State any three determinants of supply of maize. (6 marks)

d) Name any two commodities whose supply is fairly inelastic. (2 marks) (Total marks:20)

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  • 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.

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)

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  • 20 Marks

EIB – APR 2024 – L1 – Q2 – Demand and Supply of Cocoa

Calculates cocoa equilibrium with given functions, assesses coffee price impact, diagrams shifts, explains supply relationship.

Cocoa and Coffee are common cash crops in Ghana. The knowledge of their Demand and Supply is crucial for national development. Assume the Demand and Supply functions of Cocoa are given as $Q^d=12-p$ and $Q^s=9.6+0.5 p-0.2 p_c$ respectively. Where $Q^d$ is Quantity Demanded and $Q^s$ is Quantity Supplied of Cocoa, $p$ is the Price of Cocoa and $p_c$ is the Price of Coffee. (a) Determine the Equilibrium Price and Quantity of Cocoa if $p_c=\mathrm{GHC} 3.00$. [6 marks]

(b) Determine the new Equilibrium Price and Quantity of Cocoa if the price of Coffee increases from its original price of $p_c=\mathrm{GHC} 3.00$ to $\mathrm{GHC} 6.00$. [6 marks]

(c) Represent the solutions in $a$ and $b$ above with a diagram. [6 marks]

(d) Explain whether Cocoa and Coffee have Joint, Composite or Competitive Supply.[2 marks]

(Total: 20 marks)

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  • 20 Marks

EIB – APR 2024 – L1 – Q1 – Supply of Commodity and Economic Systems

Defines supply, explains wage impact on supply, defines economic system, reasons for Ghana as mixed economy, calculates elasticity.

(a) What is meant by supply of a commodity? [4 marks]

(b) Assume that Mont Richeon Ltd. manufactures concrete blocks for sale. Explain the effects of an increase in Minimum Wage on the supply of blocks from Mont Richeon. [4 marks]

(c) Explain the term Economic System. [4 marks]

(d) Give two (2) reasons why Ghana can be classified as a Mixed Economic System. [4 marks]

(e) The Interest Rate of a bank increases from $20 %$ pa to $40 %$ pa. As a result, demand for loans decreases from $\mathrm{GHC} 200,000.00$ to $\mathrm{GHC} 150,000.00$. Calculate the Interest Rate Elasticity of Demand for loans and interpret your answer. [4 marks]

(Total: 20 marks)

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