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Economics Paper 2, May/June 2008  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments
Weakness/Remedies
Strength












































Question 1

          Study the following information and answer the questions that follow

          Price of Commodity x in August, $20.00.
          Price of Commodity x in September, $29.00.
         
          Quantity of Commodity x purchased in August, 80.00 kg.
                
          Quantity of Commodity x purchased in September, 64.00 kg.

  1. Determine:

 

    1. percentage change in price of x;
    2. percentage change in quantity purchased;
    3. co-efficient of price elasticity of demand.
  1. From your answer in (a)(iii),

 

    1. comment on the price elasticity of demand for Commodity x;
    2. give a reason for your answer in (b) (i).
  1. Sketch a graph showing the type of elasticity identified in (b) (i).
_____________________________________________________________________________________________________
Observation

The question was not a popular one as it was attempted by very few candidates.  The very few that attempted it managed to score average marks because in their graphs, they forgot the origin and most especially the regular calibration of the units on each axis.  Furthermore, majority of the candidates failed to give satisfactory answer to (a) (iii) on which (b) (i) and (b) (iii) depended.  All these shortcomings reduced the overall performance of the candidates in the question to below average.
In order to score good marks in this question, candidates were expected to present their answers as follows:

          (a)      (i)      Percentage change in Price of x
                             =       Price of x in September – Price of x in August  x 100
                                                     Price of x in August                                      1
                             =       28 – 20 x 100 
                                           20         1

=       4 x 100
         10
     =       40%

  1. Percentage change in quantity purchased

 

=       Qty purchased in September – Qty purchased in August x 100
                             Qty purchased in August                                1
=       64 – 80 x 100
              80
=       -16 x 100

  1. 1

=       20%            (ignore the negative sign) 

  1. Co-efficient of price elasticity of demand

 

=       Percentage change in Qty demanded
          Percentage change in price

=       20%
          40%
=       O.5

(b)     From the answer
         
                   (i)      Demand is price inelastic.

    1. This is because the percentage change in quantity demanded

is less than the percentage change in price which makes the coefficient of price elasticity of demand less than one 


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