QUESTION 1
Products
Maize (kg)
0
Groundnuts(kg) 400
200
350
400
200
500
0
PPF
600
500
Maize(kg)
400
300
200
100
0
0
100
200
300
400
500
Groundnuts
b). 380kg of groundnuts produced
c.
450
400
350
Maize(kg)
300
250
200
150
100
50
0
0
100
200
300
400
500
600
Groundnuts
The introduction of technology has caused both the production of Maize and groundnuts to
increased.
d.
600
500
Maize(kg)
400
300
200
100
0
0
100
200
300
Groundnuts
Question 2
1. C
2. D
3. D
4. C
5. C
6. B
7. A
8. C
9. A
10. B
11. B
12. C
13. D
14. C
15. A
16. D
400
500
QUESTION 5
a) The Economizing Problem. The basic problem of economics, economizing, is that of
allocating scarce resources among competing ends. Because of the scarcity of resources,
choices must be made, and rational choices are those attaining certain objectives within
the limitation of resource scarcity.
b)
600
500
Maize(kg)
400
300
200
100
0
0
100
200
300
400
500
Groundnuts
Things that alter an economy's output, like as technological advancements, resource changes,
increases in education or training (Capital), and adjustments to the labor force, are what
generate shifts in the production possibilities curve.
c)
Economics is the study of how people make decisions in a world where wants are unlimited
but resources are limited. An economic system is a particular set of social institutions which
deals with the production, distribution, and consumption of goods and services in a particular
society.
Traditional

An economic
system where
tradition and custom
govern economic
decisions

Economic
activities are usually
cantered toward the
family, tribe, or ethnic
group

Resources are
allocated based on
inheritance

Farming,
hunting, and
gathering are done
largely in the same
fashion as the
generation before

Choices are
determined by
environment

Little or no
use of technology
Advantages
Command

The
government or other
central authority
makes all economic
decisions

Individuals
have little, if any,
influence over
economic functions

Resources are
owned by the
government

There is no
competition; the
purpose of business is
to provide goods and
services, not to make
a profit

Factories are
concerned with
quotas

Consumers
have few, if any,
choices in the market
place

The
government sets the
prices of goods and
services
Traditional

Little
friction among
members
because there is
little competition

Individual
roles are clearly
defined

System is
generally well
understood by
participants
Market

Economic
decisions are made by
individuals competing
to earn profits based
on supply and demand

Resources are
owned by individuals

Profit, not
quotas, is the motive
for increasing work

Competition
determines price and
increases the quality
of products

Individual
freedom is considered
very important;
individuals have
freedom to make
economic decisions

Also called
“capitalist” economy
Command

Can
ensure stability
because it does
not coincide with
business cycles

Serves
people
collectively
instead of
individuals; focus
on equality

Distribute
s wealth among
all of society

Products
produces fulfil
needs
Mixed

Combines
elements of pure
market and command
economies;
Government and
individuals share the
economic decisionmaking process

Government
guides and regulates
production of goods
and services

Resources are
owned by individuals

Government
serves to protect both
producers and
consumers from unfair
policies and practices
Market

Prices
determine by
market forces
(supply and
demand);
competition
brings down
prices

Consumer
s can buy
whatever they like
in whatever
amounts they
want

Adjusts to
change easily
Mixed

Can focuses
on social welfare
and political
freedom, as well as
individual liberties
Disadvantage
s

Does not
allow for growth
and development

Changes
are slow

There is
little social
mobility (your
role is
determined by
birth)

Does not
take advantage of
technology

Individual
s often have no
control over
environmental
factors

Often
there is
insufficient
resource
distribution, i.e.,
Shortages and/or
surpluses

Cannot
determine
societies
objectives and
consumer
preferences as
well as market
can

Lack of
incentives for
innovation

Infringes
on personal
freedoms

Can often
lead to corruption
among state
planners

Cannot
easily adjust to
change

Little
government
intervention

Great
variety of goods
and services

Capital
flows to where it
will get the
greatest return

Does not
always provide
basic needs of
everyone in
society, which can
lead people to slip
into poverty

May make
it difficult for
government to
provide adequate
social services

There are
occasionally
market failures

People
can make choices
which are harmful
to themselves and
to others

May not
lead to optimal use
of resources

Governmen
t intervention can
hinder progress
Why is a mixed economy the best?
In a mixed economy, private businesses and state companies coexist alongside free markets
and governmental involvement. The benefits of a mixed economy include improved social
welfare as well as better resource allocation and output.
Question 6
Price
QTY
QTY
per kg Demanded Supplied
(ZMK)
(units)
(units)
30,000
20,000
10,000
5,000
10
30
60
80
100
80
60
20
Demand & Supply Vs Price/kg (ZMK)
35 000
Price/kg (ZMK)
30 000
25 000
20 000
15 000
10 000
5 000
0
0
20
40
60
80
Demanded(units) & Supplied(Units)
Demanded
The Market Price Is K10, 000
Supplied
100
120