UGANDA ADVANCED CERTIFICATE OF EDUCATION
S.5 ECONOMICS ITEMS
ITEM ONE
In Uganda, the manufacturing sector is rapidly growing, contributing significantly to
economic development and employment. A certain company, which is a leading producer of
ceramic tiles used in construction industry, over the past five years the company has
experienced significant growth in its production capacity and supply to both the local market
and international market. Meanwhile, the ministry of trade and industry is conducting
research to better understand the factors that influence supply for locally produced goods like
tiles. Moreover, policymakers want to ensure that production meets both local and regional
supply and that prices remain stable for the consumer.
Tasks:
(a) As an economist, identify and explain factors that influence supply of commodities
including ceramic tiles.
(b) Discuss any five factors that can cause a decline in supply of ceramic tiles for the
company mentioned above.
ITEM TWO
In a free market economy, prices play a central role in determining how resources are
allocated. There is always a tendency where prices rise and fall as a result of interplay of
market forces of demand and supply, signalling producers and consumers on how to adjust
their decisions. However, in real economies like Uganda, interplay of market forces of
demand and supply may not always work perfectly, which sometimes forces the government
to intervene through price controls either to protect consumers or producers.
Tasks:
(a) Explain the role of price mechanism in allocation of resources in an economy.
(b) Discuss any four limitations of the above system in allocation of resources.
(c) Examine the benefits and drawbacks of adopting price controls in an economy.
ITEM THREE
In developing countries like Uganda, consumers are highly sensitive to changes in the prices
of essential goods and services, especially in sectors like food, beverages, and transport. In
Kampala, a local company produces popular natural fruit juice sold in supermarkets and
kiosks at UGX 5,000 per bottle. Due to rising production costs, the company increases the
price to UGX 6,000 per bottle. As a result, their monthly sales decreased from 10,000
bottles to 6,000 bottles in just one month. Understanding price elasticity of demand helps
businesses and policymakers predict how price changes affect consumer demand and overall
sales revenue.
Tasks:
(a) Based on the scenario, help the local factory calculate the price elasticity of demand for
the natural juice.
(b) Explain whether the demand for natural juice is price elastic or inelastic, providing
reasons for your answer.
(c) Explain the factors that cause instabilities in demand for commodities in an economy.
ITEM FOUR
In many developing countries, including Uganda, agriculture is the backbone of the economy,
employing a large percentage of the population. However, agricultural markets often
experience frequent price fluctuations, especially for cash crops like coffee, maize, and
beans. Farmers who grow these crops have faced highly unstable prices in recent years. In
some seasons, bumper harvests result in excess supply, causing prices to drop sharply. In
other seasons, low harvests cause supply shortages, leading to skyrocketing prices that
many consumers cannot afford.
Tasks:
(a) Explain the causes of instabilities in prices of agricultural products in developing
countries.
(b) The government is exploring measures to stabilize agricultural prices. As an economist,
suggest remedies that should be taken by the government to reduce price fluctuations of
agricultural products.
@Eddy Cosh 2025
