This question was also attracted very few candidates most of whom scored relatively low marks. Candidates were required to distinguish

between competitive and joint demand, composite and competitive supply in the (a), (b) parts of the question respectively and to explain

using diagrams, the effect of an increase in the supply of kerosine on the demand of cooking gas. Most candidates had a good

understanding of the concepts in the (a) part of the question but majority of them performed poorly in the (b) part of the question.

Candidates were expected to answer thus:

(a)(i) There is competitive demand for two commodities that serve the same purpose, an increase in the price of one results in an increase in quantity demanded for the other while two commodities are in joint demand when an increase in the price of one results in an decrease in the demand for the other and vice versa.

(ii) Commodities are in composite supply when the total supply of the commodities will meet a particular need or want. For example, the need for beverages can be met from the supply of tea, coffee and cocoa drinks while a commodity is in competitive supply when its supply for one of its uses reduces its supply or availability for another use. For example, the supply of land for building of school reduces the supply of land for farming.

(b) Kerosine and gas have a competitive demand. An increase in the supply of kerosene other things being equal will bring about a fall in its price. The increase is shown by a rightward shift in supply curve of kerosene.

If the price of cooking gas remains the same, the demand for gas may fall. This is shown below by a leftward shift of the demand curve.

An increase in the supply of kerosene shifts the supply curve to the right i.e S0S0 to S1S1.
Equilibrium price falls from P0 to P1 as quantity increased from Q0 to Q1 and equilibrium point from e0 to e1

Since kerosene and gas are in competitive demand, an increase in the quantity demanded for kerosene will result in a leftward shift which is a fall for gas from D0D0 to D1D1. Price falls from P0 to P1 as quantity supplied decreased for Q0 to Q1.