RWANDA NATIONAL EXAMINATIONS COUNCIL (Fercenecaee (Se P.O.BOX 3817 KIGALL-TEL/FAX : 586871 ADVANCED LEVEL NATIONAL EXAMINATION 2008 Economics I 054 11 Nov. 2008 8.30am-11.30am. z 7 SUBJECT : ECONOMICS I OPTION: HUMANITIES TIME : 3 HOURS i INSTRUCTIONS: This paper consists of TWO sections: A and B. Section A: Answer ALL questions. Section B: Answer any THREE questions of your choice, (55 marks) (45 marks) 054 - Page 1 of 4SECTION A: Answer ALL questions. (55 marks) 1. (a) What is a public good? (1 mark) (b) Give any two characteristics of a public good. (2marks) (o) Distinguish between wealth and welfare. (2marks) (2) Differentiate between equilibrium price and market price. {2marks) {b) Given that: Qs = 124 + 1.25.P Qd = 189 - 2.25.P Find the equilibrium. (1mark) (a) What is a derived demand? (1mark) (b) Distinguish between labour force and labour supply. (2marks) (c) Give three reasons why a supply curve of labour slope may be regressive. (3marks) (a) () Distinguish between break even point and shut down point of a firm. (2 marks) (ji) Outline any four features of monopoly. (4 marks) (ii) Discuss the policy instruments that may be used to control monopoly. (4marks) (b) @ Distinguish between GDP and NNP as used in national income. {2 marks) (ji) How carl you derive GDPmp ? (1mark) {@) What is the difference between accelerator principle and multiplier principle? ‘ (2marks) (b) Given that the MPc = 0.6 and the level of national income js 3 million francs. Calculate: - PMs (1mark) = The size of multiplier, and (1mark) ~The final change in national income. (1mark) {a) Why is it likely for fresh milk to have a vertical supply curve? {2marks) {b) When price of mangoes is 50 Frw per unit, supply is 10 times “units and when price rises from 50 Frw to 60 Frw, supply set ant from 10 to 15. Calculate the elasticity of supply. (Imari) 054 - Page 2 of 4@ Log 7.” (al Given that price of the commodity increased from 500frw to 1000frw and quantity demanded of commodity decreased from 25kg to 20kg per day. () Calculate the price elasticity of demand, () What form of elasticity does the commodity have? (6) (i) Commodities X and ¥ are jointly supplied. How does an increase in demand for X likely to affect the price of Y> (ii) Give two examples of such commodities. 8. (a) (i) Give three ways through which an oligopolistic firm can increase sales without changing prices. (@) Outline four features of oligopolistic market structure {b) Basing on the production theory of a firm, explain the following: @ A firm’s optimum Point level of output Gi) A firm’s loss minimization A firm’s break even point (iv) A firm’s point of profit maximisation, (1mark) (1mark} (1marky (2marks) (3marks) (4marks) (2marks) (2marks) (2marks) (2marks) SECTION B: Attempt any THREE questions of your choice. (45 marks) 9. (@) (i) What does the term “Import quotas” mean? (i) Give any four reasons why a government may take an increased use of quotas. (>) () Differentiate between favourable terms of trade and favourable balance of trade. (i) Does favourable terms of trade imply favourable balance of trade? And why? (iii) Give two examples of invisible trade, (c) Given the table below: Total Revenue(TR) | Total Cost(fc) | Out PatiSalty 10,000 frw 8,700frw 15kg (i) Calculate the price of salt. (i) What is the level of abnormal profit per unit? 054 - Page 3 of 4 (1mark) (4marks) (2marks) (2marks) (2marks) (2marks) (2marks)10. ll. 13. Log (a) Briefly discuss five reasons why education is important in the development of your country. (LOmarks) (b) Present the arguments for and against the policy proposals joe “cost sharing” in universities and higher institutions of learning in Rwanda. (Smarks) (a) () What is NEPAD? (2marks) (ii) Give any five problems likely to be faced by NEPAD in implementation of NEPAD initiatives. (Smarks) (6) () Give five reasons why Rwanda joined East African Community. (Smarks) {i Distinguish between comparative advantage and absolute advantage for a country. (3marks) {@) {i Distinguish between devaluation, revaluation and depreciation. [2marks) (ij, When is devaluation carried out? Give any three purposes for devaluation. {Smarks) (ii) Outline five effects of currency depreciation in an economy, (Smarks) (b) (i) What is demand for money? (1mark) (i) Give any two factors which may influence demand for money. (2marks) {a) (i) Account for high income inequalities prevailing in Rwanda. (Smarks) {i) Suggest possible remedies to combat such inequalities. (4marks) (b) Give reasons to justify the following: (i) Location of a. cement industry at Bugarama where there is relatively low demand for cement. (i) Location of furniture workshops in towns where are no raw materials for making furniture. (ii) Location of a bank to Buzinganjwiri that offers ‘services to people who live in Kigali city. {6marks) 054 - Page 4 of 4