Explain the difference between a decrease in demand and a decrease in quantity demanded, and list factors that could cause demand for computers to fall in Cameroon.

Here are the answers to the questions: 2. a) Distinguish between a decrease in demand and a decrease in quantity demanded. A decrease in demand* refers to a shift of the entire demand curve to the left. This occurs when, at every given price, consumers are willing and able to buy less of a good or service. It is caused by changes in non-price factors such as consumer tastes, income, prices of related goods, expectations, or the number of buyers. A decrease in quantity demanded* refers to a movement along a stationary demand curve, specifically an upward movement along the curve. This occurs solely due to an increase in the price of the good or service itself, assuming all other factors remain constant. 2. b) Factors that may lead to a fall in the demand for computers in Cameroon: • Decrease in Consumer Income: If the average income of consumers in Cameroon falls, people will have less disposable income to spend on relatively expensive items like computers, leading to a decrease in demand. • Increase in Price of Complementary Goods: If the price of complementary goods for computers, such as software, internet services, or printers, increases significantly, it could make owning and using a computer more expensive overall, thus reducing demand for computers. • Decrease in Price of Substitute Goods: If the price of close substitutes for computers, such as advanced smartphones or tablets, decreases, consumers might opt for these alternatives instead, leading to a fall in computer demand. • Changes in Tastes and Preferences: A shift in consumer preferences away from traditional computers towards other devices or a general decline in the perceived necessity of new computers could reduce demand. • Negative Consumer Expectations: If consumers expect computer prices to fall in the future, or if they anticipate an economic downturn, they might postpone their purchases, leading to a current fall in demand. • Decrease in Population/Number of Buyers: A decline in the population or a reduction in the number of potential buyers (e.g., fewer students needing computers for school) would naturally lead to a lower overall demand. • Technological Obsolescence/Slower Innovation: If new computer models offer only marginal improvements over older ones, or if the pace of innovation slows, consumers might see less reason to upgrade, reducing demand for new computers. 3. a) Sources of monopoly power: • Control over Key Resources: A firm may have exclusive ownership or control over a crucial input or raw material necessary for production, making it impossible for others to compete. • Government-Created Monopolies: Governments can grant exclusive rights to a single firm to produce a good or service, often through patents (for inventions), copyrights (for creative works), or public franchises (e.g., utilities). • Natural Monopolies: Occur when a single firm can supply a good or service to an entire market at a lower cost than two or more firms. This often happens in industries with high fixed costs and economies of scale, such as water supply or electricity distribution. • High Barriers to Entry: Significant obstacles prevent new firms from entering the market. These can include large capital requirements, extensive regulatory hurdles, or strong brand loyalty established by the existing monopolist. • Network Externalities: The value of a product or service increases as more people use it. This can create a "winner-take-all" market where one firm dominates (e.g., social media platforms). • Aggressive Business Tactics: A firm might engage in predatory pricing, extensive advertising, or other strategies to drive out competitors or deter new entrants. 3. b) How oligopolistic firms can increase their market share: • Product Differentiation: Firms can differentiate their products through branding, quality, features, design, or customer service to attract more customers and gain a competitive edge. • Advertising and Promotion: Extensive advertising campaigns, sales promotions, and public relations can increase brand awareness, influence consumer preferences, and capture a larger segment of the market. • Price Competition (though often avoided): While oligopolies often avoid aggressive price wars due to the risk of mutual destruction, a firm might strategically lower prices to gain market share, especially if it has a cost advantage. • Non-Price Competition: This includes strategies like improving product quality, offering better after-sales service, extending warranties, or innovating with new features to attract customers without directly cutting prices. • Mergers and Acquisitions: Firms can acquire competitors or merge with other companies to consolidate market power, eliminate rivals, and expand their customer base. • Technological Innovation: Investing in research and development to introduce new or improved products, more efficient production methods, or superior technology can give a firm a significant advantage and attract more customers. • Strategic Alliances and Joint Ventures: Collaborating with other firms (even competitors) on specific projects, distribution, or technology can help expand reach and market presence. • Expansion into New Markets: Entering new geographical markets or developing new product lines can broaden a firm's customer base and increase its overall market share. 4. a) Distinguish between: (i) Profit and interest. Profit* is the financial gain realized when the revenue from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity. It is the reward for entrepreneurship and risk-taking. Interest* is the cost of borrowing money or the return on lending money, typically expressed as a percentage of the principal amount. It is the reward for providing capital. (ii) Idle and active balances. Idle balances* refer to money held by individuals or firms that is not being used for immediate transactions or investments. This money is typically held for speculative purposes (waiting for better investment opportunities) or precautionary reasons (as a buffer against unexpected expenses). Active balances* refer to money held by individuals or firms specifically for immediate or near-future transactions, such as purchasing goods and services or paying bills. This money is actively circulating in the economy. 4. b) Factors that influence the transactionary demand for money: • Level of Income: As an individual's or a country's income increases, their spending on goods and services tends to increase, leading to a higher demand for money to facilitate these transactions. • Price Level: A higher general price level (inflation) means that more money is required to purchase the same quantity of goods and services, thus increasing the transactionary demand for money. • Payment Period/Frequency of Income Receipts: If income is received less frequently (e.g., monthly vs. weekly), individuals need to hold larger average balances to cover expenses between paydays, increasing transactionary demand. • Spending Habits/Frequency of Payments: If individuals or firms make frequent payments, they will need to hold more money for transactions. Conversely, if payments are infrequent, less money is needed. • Availability of Credit Facilities: Easy access to credit cards or overdraft facilities can reduce the need to hold large cash balances for transactions, thereby decreasing transactionary demand. • Development of Financial Systems: Efficient financial systems with easy access to banking services and electronic payment methods can reduce the need to hold physical cash for transactions. • Business Activity Level: For firms, a higher level of business activity (more production, sales, and investments) requires more money to cover operational expenses and transactions. That's 2 down. 3 left today — send the next one.