Economics Paper 2, May/June 2011  
Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
General Comments

Question 7
(a) Explain with examples, the terms competitive demand and complementary demand.
(b) With the aid of diagrams, analyse the effect of a decrease in the import duty on cars on the price and consumption of petrol.

The (a) part of this question was well attempted by the candidates.  However, in the (b) part, most candidates could not carry out the appropriate analysis as required in the question. Candidates were expected to present the following to score the optimum marks for this question.
Figure (i)   Quantity of cars  

 Figure (ii) Quantityof petrol

A decrease in the import duty on cars resulted in a reduction in the price of cars from Po to P1.  This led to an increase in quantity demanded of cars from Qo to Q1  as shown in figure (i).
An increase in the quantity demanded of cars brought about an increase in consumption of petrol. This shifted the demand curve from Do to D1 in figure (ii).  The price of petrol also increased from Po to P1.                                                             

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