Advanced level 2023 south west regional mock Economics 3
Advanced level 2023 south west regional mock Economics 3
1.Be it demand-pull or cost-push, if the rate of inflation keeps growing, even if it is correctiV anticipated
our economy will be in big trouble. In a hyperinflation, there are ultimately only losers. People on fixed
especially those who are retired, have also traditionally been hurt by inflation. But in recent
. social security benefits have been indexed for inflation ‘
Source: Adopted from Introduction to Economics by Stephen L. Slavin, 1991 (P, 174).
a. Define the term indexation as implied in the underlined phrase.
b. i. Distinguish between demand-pull inflation and cost-push inflation,
ii. State any three causes of demand-pull inflation.
c. Apart from hyperinflation used in the passage, give any three other forms of inflation.
d. Identify any three beneficiaries of inflation.
e. State any four remedies to inflation.
2. The table below shows the total utility of a house wife for rice, beans and fish
budget of 7,200FCFA.
income,
years
(3marks)
The goods are valued at the following prices: Rice = 400FCFA Beans= 80QFCFA Fish = 1200FCFA
a.If she wishes to consume all three goods and maximize satisfaction. How many of each will she
consume and why?
b. If she wants to buy beans only, what quantity will she buy, given the budget constraint? Give a
reason for your answer.
c. Given the circumstance in (b) above, calculate the:
i. Consumer surplus?.
ii. Balance of income after expenditure?
d.State two criticisms of the cardinal approach of consumer equilibrium.
3. In a perfectly competitive market, each producer acts in his/her own self-interest Further, each
consumer also acts in his/her own self-interest. There is no omniscient social planner t
and consumers how to behave so that the efficient level of output is produced. Nevertheless, the output
produced in a competitive market is the one that maximizes net economic benefits (as measured the
sum of surpluses).
-s * «
Source: Adapted from Microeconomics by David Besanko and Ronald Braeutigam. Page 390.
3
– State.four characteristics of a competitive market ,
b. Which economic term best describes the underlined phrase?
In addition to the merits of competitive markets highlighted in the passage, state any three
disadvantages of competitive markets,
d. Illustrate the short run equilibrium of :
i. A high cost firm in a competitive market.
ii. A low cost firm in a competitive market.
