Economics Paper 2, Nov/Dec. 2011  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments
Question 2

The diagram below represents the situation in a regulated market.  Use the diagram to answer the questions that follow:                                       
2345   Price                 D                                                     S         
678        Pc   

910        Po


11        Pk

                         S                                                                   D      

            O                     Ql                  Qo                 Q2                 Quantity

  1. What do Po and Qo represent?
  2. What would you call the regulated price Pc?  Explain your answer.
  3. What is Q1Q2?
  4. What is Pk
  5. In what circumstances would a commodity be sold at Pk?
  6. Name two commodities whose market situation can be represented by    the diagram.
  7. State three measures that can be taken to make the regulated price



This question was unpopular with the candidates.  Only few of the candidates attempted
this question and provided appropriate answers for the (a), (b), (c), (d) and (e) parts of the question.  The (f) and (g) parts were not properly attempted.  This deprived the candidates the opportunity of obtaining the maximum marks for the question.
Candidates were expected to state the following points in (f) and (g) to score high marks.

(f)        (i) Agricultural commodities in general;
             (ii) Labour.

(g) Measures that could be taken to make regulated price effective:

(i)         raise the price of substitutes through taxation and other means;
(ii)        advertise the commodity;
(iii)       buy and store the commodity;
(iv)       encourage exportation;
(v)        impose a tax on output;
(vi)       remove subsidies;
(vii)       increase input prices;
(viii)       increase the profitability of goods in competitive supply.

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