waecE-LEARNING
Economics Paper 2, May/June 2013  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments
Weakness/Remedies
Strength




QUESTION 2

The table below shows the scale of preference of a student – Mr. Smith whose disposable income is $ 7.00. Use the information in the table below to answer the questions that follow:

Items needed

Price ($)

 

Textbook

Shirt

Shoes

Trouser

Notebook

School fees

Mattress

 

5.00

2.00

3.00

3.00

1.00

7.00

10.00


(i) What will Mr. Smith spend his money on?

(ii) Explain your answer in in 2(a) (i).

(b) (i) What is the opportunity cost of Mr. Smith’s decision in 2(a)(i) ?

(ii) Explain your answer in 2(b) (i).

(c) (i) If Mr. Smith’s disposable income increases to $ 10.00, what will he spend it on?

(ii) What is the opportunity cost of the decision in 2(c)(i)?

(d). Define “scale of preference” and “opportunity cost”.

(e). What is the importance of a scale of preference?

OBSERVATIONS

 

This question was popular with the candidates. The question required candidates to apply the concept of scale of preference and opportunity cost to real life situation. Most candidates fell short of this expectation. This made them to score average marks.

The candidates were expected to provide the following answers to score high marks.

(a) (i) Textbook and shirt
(ii) Because the textbook and the shirt are the items at the top of his scale of preference which can be purchased with his $7.00
(b) (i) The shoes, the trousers and the notebook
(ii) Because those three items are the next best alternative, which can be purchased with $7.00
(c) (i) Textbook, shirt and shoes
(ii) Trousers, the notebook and $6.00 out of his school fees.
(d) A scale of preference is a list of wants arranged in an order of importance.
Opportunity cost is the alternative want foregone as a particular item is chosen, or as a particular want is satisfied.
(e) A scale of preference helps an individual, a firm or a government to make rational use of available resources to satisfy the most important want.

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