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Here are the answers to your questions: 1. (a) To calculate the price elasticity of demand (PED) when the price increases from 250 FCFA to 300 FCFA, we use the percentage change method. From Table 1: When P_1 = 250 FCFA, Q_1 = 400 kg When P_2 = 300 FCFA, Q_2 = 250 kg Step 1: Calculate the percentage change in quantity demanded. \% Q_d = (Q_2 - Q_1)/(Q_1) × 100\% = (250 - 400)/(400) × 100\% = (-150)/(400) × 100\% = -37.5\% Step 2: Calculate the percentage change in price. \% P = (P_2 - P_1)/(P_1) × 100\% = (300 - 250)/(250) × 100\% = (50)/(250) × 100\% = 20\% Step 3: Calculate the price elasticity of demand. PED = (\% Q_d)/(\% P) = (-37.5\%)/(20\%) = -1.875 The absolute value of PED is 1.875. PED = 1.875 1. (b) (i) & (iii) An increase in supply refers to a situation where producers are willing and able to offer more of a good or service for sale at every given price. This is caused by factors other than price, such as a decrease in production costs, technological advancements, or an increase in the number of producers. On a supply and demand diagram, an increase in supply is represented by a rightward shift of the entire supply curve (from S_1 to S_2). This leads to a lower equilibrium price and a higher equilibrium quantity, assuming demand remains constant. 1. (b) (ii) Four economic effects of a maximum price legislation (price ceiling): • Shortages: If the maximum price is set below the equilibrium price, the quantity demanded will exceed the quantity supplied, leading to a shortage of the good. • Black markets: Due to shortages, goods may be sold illegally at prices above the maximum price, creating a black market. • Reduced quality: Producers may cut costs by reducing the quality of the product to maintain profitability under the price ceiling. • Underinvestment: The lower prices may discourage new investment in the industry, potentially leading to long-term supply problems. 1. (b) (iv) Four functions of the wholesaler in the channel of distribution: • Bulk breaking: Wholesalers purchase goods in large quantities from manufacturers and then break them down into smaller, more manageable units for retailers. • Warehousing and storage: They store goods, reducing the need for manufacturers and retailers to hold large inventories. • Transportation: Wholesalers often arrange for the delivery of goods from manufacturers to retailers. • Risk bearing: They assume the risk of damage, obsolescence, or price fluctuations for the goods they hold. 2. (a) Completing the table by calculating the Marginal Product: Marginal Product (MP) is the change in Total Product resulting from adding one more worker. MP = Total Product_n - Total Product_n-1 | Number of workers | Total Product (kilogrammes) | Marginal Product (kilogrammes) | | :---------------- | :-------------------------- | :----------------------------- | | 0 | 0 | - | | 1 | 10 | 10 | | 2 | 22 | 12 | | 3 | 30 | 8 | | 4 | 40 | 10 | | 5 | 50 | 10 | | 6 | 55 | 5 | | 7 | 58 | 3 | | 8 | 59 | 1 | 2. (b) (i) Diminishing returns occur when the marginal product of an additional worker begins to decrease. Looking at the Marginal Product column: • From 1st to 2nd worker, MP increases from 10 to 12. • From 2nd to 3rd worker, MP decreases from 12 to 8. Therefore, diminishing returns set in with the 3rd worker, at an output level of 30 kg. Output level = 30 kg 2. (b) (ii) Identifying the forms of merger: A. A brewery company takes over a chain of sales points and snack bars. This is a vertical merger (specifically, forward integration) because the brewery is acquiring businesses further down its distribution chain. B. The merging of MTN and Orange mobile telephone services to form a giant communication firm. This is a horizontal merger because two companies operating in the same industry and at the same stage of production are combining. C. The integration of a pharmaceutical firm with a Cement factory. This is a conglomerate merger because the two companies operate in completely unrelated industries. 3. (a) Distinguishing between fixed costs and variable costs: • Fixed costs are expenses that do not change with the level of output in the short run. They must be paid regardless of whether production occurs. Examples: Rent for a factory, insurance premiums, salaries of administrative staff. • Variable costs are expenses that change directly in proportion to the level of output. They increase as production increases and decrease as production decreases. Examples: Cost of raw materials, wages of production workers, electricity used for machinery. 3. (b) Three factors that hinder occupational mobility of labour: • Lack of skills and education: Workers may not possess the necessary qualifications, training, or specialized skills required for new or different occupations. • Lack of information: Workers might be unaware of available job opportunities in other sectors or regions, or lack information about the training required for new roles. • Geographical immobility: Workers may be unwilling or unable to relocate to a different area for a new job due to family ties, housing costs, or social connections. 4. (a) Distinguishing between the following pairs of concepts: (i) Absolute advantage and comparative cost advantage: • Absolute advantage occurs when a country can produce a good using fewer resources (e.g., less labor or time) than another country. • Comparative cost advantage (or comparative advantage) occurs when a country can produce a good at a lower opportunity cost than another country, meaning it gives up less of other goods to produce that specific good. (ii) Balance of trade and terms of trade: • Balance of trade is the difference between the total value of a country's exports and its total value of imports over a specific period. It is a component of the current account. • Terms of trade is the ratio of a country's export prices to its import prices, usually expressed as an index. It indicates how many units of imports a country can obtain per unit of exports. 4. (b) Four reasons for trade restriction: • Protection of infant industries: Governments may impose restrictions to shield new domestic industries from foreign competition, allowing them time to grow and become competitive. • National security: Restrictions can be used to ensure self-sufficiency in strategically important industries (e.g., defense, food) that are vital for national security. • Protection of domestic jobs: Trade barriers can be implemented to safeguard local employment by making imported goods more expensive, thus encouraging consumption of domestically produced goods. • To correct balance of payments deficit: By reducing imports through tariffs or quotas, a country can aim to improve its trade balance and overall balance of payments. 4. (c) Four measures a country can use to remedy a balance of payments surplus: • Currency appreciation: Allowing the domestic currency to appreciate makes exports more expensive and imports cheaper, which can reduce the surplus. • Reduce trade barriers: Lowering tariffs and quotas on imports encourages more foreign goods to enter the domestic market, decreasing the surplus. • Increase foreign aid or investment abroad: Increasing financial outflows through foreign aid or direct investment in other countries can help reduce the surplus. • Fiscal expansion: Increasing government spending or cutting taxes can boost domestic demand, potentially leading to higher imports and a reduction in the surplus. 5. (a) Definitions of economic concepts: (i) Economic growth: An increase in the production of economic goods and services in an economy over a period of time, typically measured by the percentage increase in real Gross Domestic Product (GDP). (ii) Economic development: A broader concept than economic growth, referring to the improvement of economic welfare and quality of life for a country's citizens, encompassing factors like poverty reduction, improved health, education, and infrastructure. (iii) National income: The total value of all final goods and services produced within a country's borders in a specific period, plus net income from abroad, representing the total income earned by a nation's residents. (iv) National debt: The total amount of money that a country's government owes to its creditors (both domestic and foreign) at a particular point in time, accumulated from past budget deficits. (v) Budget: A financial plan that estimates an organization's (or government's) revenues and expenditures for a future period, outlining how resources will be allocated to achieve specific goals. 5. (b) Four benefits to Cameroon of her belonging to CEMAC: • Larger market access: Membership provides Cameroon with access to a wider regional market for its goods and services, fostering trade and economic expansion. • Monetary stability: Being part of the CFA franc zone within CEMAC provides currency stability, reducing exchange rate risks and facilitating trade and investment. • Regional integration and cooperation: CEMAC promotes regional projects, infrastructure development, and common policies, which can benefit Cameroon through shared resources and coordinated efforts. • Increased foreign investment: A larger, more stable regional market can make Cameroon and the CEMAC zone more attractive to foreign direct investment. 5. (c) Three problems encountered in the calculation of national income: • Non-market activities: Activities like household production (e.g., cooking, childcare by family members) or subsistence farming are not exchanged in markets and are difficult to value and include in national income. • Underground economy/informal sector: Economic activities that are illegal or undeclared (e.g., black market transactions, undeclared cash jobs) are not recorded, leading to an underestimation of the true national income. • Double counting: It is challenging to accurately distinguish between final goods and intermediate goods, which can lead to some goods being counted multiple times in the production process, inflating the national income figures. Send me the next one 📸