P220/ 1

ECONOMICS

PAPER 1
1
2 2 HOURS

IBANDA HIGH SCHOOL

INSTRUCTIONS TO CANDIDATES

Attempt four items

All Items carry equal marks.

Credit will be given for the use of relevant diagrams

Any additional item(s) attempted will not be marked

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Item one
a). Economics is greatly centered on the problems faced by man to make
effective use of resources and distribution of goods and services . Mr.
Kichamba, a resident of Kiwooka trading center wishes to make the
consumption decisions basing on the alternatives. However his budget is
constraint (Shs .250) .Due to limited resources, he wishes to optimize his
budgeted amount effectively.
Supporting information
Given that Kichamba wishes to buy clothes, food, water, bread and they
cost Shs.100, Shs.200, Shs.300 and Shs.400 respectively.
Task
Help Mr. Kichamba to relate the three fundamental economic
problems in the scenario, hence help him to make a decision basing on
the scale of preference. (08scores)
b). Assume your community members wish to start up a retail shop in
any one of the trading centers in your local community and they have
been required to point out economic questions they would consider first
before planning the retail shop.
Task
You have been invited as a senior economist to help them. Make a write
up of the economic questions you would provide to the community
members? (12 scores)
Item two
Mr. Muhanuzi is a trader living in Kikorya Trading center. He deals in
both wholesale and retail trading. Currently he is dealing in cosmetics
and stationary. A number of customers always visit him to get a variety
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of commodities. However Mr. Muhanuzi has noticed that whenever he
increases the prices of his commodities, the demand for such
commodities tends to be low and vice versa.
Support Material; A demand schedule is as below;
Cost Price ( Shs) Quantity demanded ( kgs)
1000 10
800 20
600 30
400 40
200 50

Task
a). As an economics student who has the knowledge on the concept of
demand , Help Mr. Muhanuzi to understand the law of demand.
(04 scores)
b). Using the information in the scenario, Provide an illustration of the
demand curve from the demand schedule above (04 scores)
c). Help Mr. Muhanuzi to understand the situations under which the law
of demand stated in (a) above may be violated. (12scores)

Item three
Economics as a social science deals with the dynamics / changing
behaviours over time. In micro economics, it is concerned with the
economic behavior of an individual economic unit and how an
individual economic entity allocates its resources. Thus in economies
like Uganda it is regarded to be mixed basing on the above economic

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statements. This has created a lot of misconceptions among many people
in your country.
Task
a) .Help your country people to understand the reasons as to why
Uganda is considered to be a mixed economy. (08 scores)
b) Come up with the written text on the implications of such an
economic system. (12 scores)
Item four
In most economies like in Capitalistic economies, the prices are believed
to be determined by the interaction of the forces of demand and supply
whereas this is not the case with the socialistic and other economies. In a
meeting held in your local community area, people were propelled to
know how the prices in an economy are determined. You have been
invited to give out a speech on the behalf of your local community
members regarding Price determination.
Task
a). As an economist, Help the local members of your community to
understand how the prices are determined in an economy. (12 scores)
b).Briefly, explain to your community the role of price in an economy.
(08scores)
Item five
During the recent surveys by the government under the Ministry of
Trade and commerce in uganda in priotizing the Parish Development
Models issued out the trading licenses to the local investors in the
country to carry out trading. Assume you were among the investors
who received licenses in your community and you would wish to
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engage in the production of a combination of two commodities using
the available resources. (Production of Coffee and Cotton).
Task
a). Use an illustration ,Show how you would engage in the production
of a combination of two commodities using the available resources .
(Coffee and Cotton). (08 scores)
b). Come up with the text explaining the cause of shift of the above
curve in (a) above to;
i). Inwards
ii) .Outwards (12 scores)
END
NICE HOLIDAYS