SECTION A: MICROECONOMICS

Question 1

Use the following caption of a proposed policy to answer question 1a and 1b. Proposed policy position: "The economic planning unit in the ministry of finance put across a proposal for government intervention in the market by gazetting minimum and maximum prices for certain products and services".

1a. As an economist responsible for advising parliamentarians of the ruling party, you were requested to make a written submission in support of this proposal. Using relevant examples as well as graphical illustrations prepare the rationale and benefits of the proposed policy position to the government and the society. (10 Marks for maximum prices and 10 marks for minimum prices)

1b. As the chairperson of the Private Business Association (PBA) in the country, critique the proposed policy by highlighting the negative impact of such a policy on businesses. Your discussion must be supported by relevant examples. (10 Marks)