Advanced level 2025 Littoral regional mock Economics guide
Advanced level 2025 Littoral regional mock Economics guide
1.
a) A planed (communist, or state or communist) economic system is one in which the problems of what to produce,
how to produce and for whom to produce is solved by the government only. The government owns all the lands,
factories, farms, schools, hospitals and supermarkets. Eg. China, Cuba, North Korea, Belarus, Lagos. (2mks)
– State ownership of business wealth, – No competition, – Price control and rationing, – No consumer sovereignty
– Central government plans production and distribution (3×2=6mks)
– A public, merit and private goods produced
– Social or public interest
b)
i) Inequality in income and wealth, can be solved by:
– Progressive taxes
– Unemployment pay, low priced education, health and housing programs, maximum price control, price ceilings
– Policies to assist the poor and disabled
– Student grants
– Expansionary monetary policies by directing credits to small and medium sized businesses
– Tax concession (tax reliefs)
– Grants and subsidies
– Budget deficit
| ii) iii) |
The provision of public goods and merit goods Fighting negative externalities like providing cheaper cleaner and quieter sources of energy like hydroelectricity nuclear and atomic powers, providing underground systems, flyovers, pollution tax, education, the creation of industrial zones, planting trees, banning production processes that use |
| diflorochlorocarbons. | |
| iv) | Reducing monopoly power e.g outlawing a monopoly, progressive taxes, nationalization, part ownership, deregulation, subsidies allowing imports, product standard schemes, indegenilasation. Controlling inflation using contractional fiscal and monetary Policies. Reducing unemployment through training, retraining programs, expansionary fiscal and monetary policies. Building factories, national employment fund, controlling the population etc. Sharing the benefits of economic change, like the provision of severance of redundancy payments, training |
| v) vi) |
|
| vii) | |
| and retraining programs etc. | Up to 12mks for 3 points well explained. |
2.
a) Utility is defined as the degree of satisfaction obtained when a good or service is consumed. It differs from person
to person and from place to place. It is measured in utils. The law of diminishing marginal utility states that as more
goods and services are consumed the additional satisfaction gradually reduces becomes zero and then negative. The
table below gives the total and marginal utility functions for five cold drinks drunk by a thirsty person. (3mks)
| Quantity | T.U (utils) | Marginal utility units |
| 1 | 40 | 40 |
| 2 | 70 | 30 |
| 3 | 90 | 20 |
| 4 | 90 | 0 |
| 5 | 80 | -10 |
3mks
