Cameroon GCE A/L June 2019 ECONOMICS 3

Cameroon GCE A/L June 2019 ECONOMICS 3

Cameroon GCE A/L June 2019 ECONOMICS 3

Economics 3



General Certificate of Education Examination

 JUNE 2019

                                                                                                                                                                ADVANCED LEVEL


Subject Title ECONOMICS
Paper No./Title 3
Subject Code No 0725


1Hour 45 minutes



Answer ANY THREE questions. All questions carry equal marks.

You are advised to spend the first fifteen minutes reading the paper.

In calculations you are advised to show all the steps in your working


You are reminded of the necessity for good English and orderly presentation in your answers.


Calculators are allowed.

  1. In a market economy people and firms act in their own interest to answer the what, how and for whom questions. In economic terms, a market is an arrangement that allows buyers and sellers to come together in order to exchange goods and services. A market might be in a specific location, such as a farmer’s market or a flea market. As long as a mechanism exists for buyers and sellers to come together, a market can exist. In a market, people’s decision act as votes… Because products are always looking for goods and services that consumers will buy, the consumers play a key role in determining what to produce.


Source: Adapted from Economics, Principles and Practices by Gary E clayton, page 36


  1. State four characteristics of market economy                 (4 marks)
  2. What do you understand by the statement, “In a market, people’s decision act as votes?” (4 marks)
  3. Which economic term is used to describe the role the consumer plays in determining what to produce in a market economy? (2 marks)
  4. Enumerate four disadvantages of market economy. (4 marks)
  5. Briefly explain what is meant by the what, how and for whom questions in the passage (2 + 2 + 2 marks)

  1. Due to the high level of domestic inflation, a government decides to protect the lower-income groups by setting maximum retail prices for certain essential foodstuffs. The existing equilibrium price of such foodstuff is 1,500 FCFA per unit

(a)  With the use of a diagram, illustrate and state the effect on the market for this commodity if the maximum     price is set at:

  • 1,500 FCFA
  • 1,300 FCFA
  1. What other name is given to the maximum price? (6 marks)
  2. List four consequences for a maximum price legislation. (2 marks)
  3. State one strategy the government can use to make the implementation of this policy effective.   (2 marks)
  4. Define the terms black market price. Illustrate it on the diagram in a) above. (4 marks)
  5. Identify two areas of economic activity where government can apply this price control legislation (2 marks)



“A number of workers have their wages and salaries influenced by some kind of collective bargaining procedure. The individual worker is in a weak bargaining position in relation to his/her employer; the main purpose of a trade union is to remove this weakness by forcing the employer(s) to negotiate with representatives of the whole, or a proportion of the labor force. Unions also provide a channel of communication between workers and employer(s)…”

Source: Stanlake’s Introductory Economics by S.J Grant, 7th Edition, page 172.


  1. Define:(i) Collective bargaining      (2 marks)

(ii)   A trade union                     (2 marks)

(b) State any two advantages for a worker belonging to a trade union (2 marks)

(c) (i) Enumerate four factors that can weaken the powers of a trade union       (4 marks)

(ii)  State four bases of higher wage claims by trade unions    (4 marks)

(d) (i) List any methods of wage payment (2 marks)

(ii) Give four reasons why two cleaners in the same firm may earn different wages.   (4 marks)

  1. The table below gives information on the tax system of a given country.


Personal income (FCFA) Personal income tax (FCFA) ART (%) MRT (%)
0 0 / /
40.000 600 1.5 1.5
60.000 2.000 3.3 7
120.000 8000
200.000 18.000
300.000 35000
500.000 80.000


(a) Define

(i) The average tax rate (ART) (2 marks)

(ii) the marginal tax rate (MRT) (2 marks)

(b) Complete the table above (8 marks)

(c) Which tax system is represented by (b) above? Justify your answer (4 marks)

(d) State four reasons why the government imposes taxes (4 marks)

  1. In a given hypothetical economy, the following values obtain (figure in million FCFA)

Investment = 520

Government spending = 800

Consumption = 80% of disposable income

Exports = 600

Imports = 20% of income

Income tax = 50% of income

There are no indirect taxes


  1. Which type of economy is implied by the above statistics? (2 marks)
  2. Calculate the equilibrium level of income (4 marks)
  3. (i) Determine the total value of leakage for this economy. (2 marks)

(ii) What is the country’s balance of payment situation?         (3 marks)

d. (i) What is the value of the multiplier in this economy? (4 marks)

(ii) State two factors that influence the value of the multiplier (2 marks)

e. If the government wishes to increase national income by 1,200 million FCFA by how much should it increase its own spending (3 marks)



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