12.1 ECONOMICS [100]

QUESTION ONE (25)

With the aid of suitable diagrams, illustrate how supply and demand analysis can explain changes in price and output of tea when a substitute good (coffee) is introduced in the market, ceteris paribus

QUESTION TWO (30)

A monopoly can take advantage of its market power by using price discrimination. In terms of this statement, list and discuss the various categories of price discrimination. For each category, substantiate your answer with the aid of examples.

QUESTION THREE (30)

3.1 Analyse the composition and features of business cycles. (12)

3.2 Explain how authorities can use fiscal policy to smooth out business cycles. Substantiate your answer with the aid of examples from a country of your choice. (18)

QUESTION FOUR (15)

Compare and evaluate the growth and development policies of your country against international benchmarks.