Explanation

(a)(i) To prevent exploitation of consumers by middlemen and producers.

(ii) To avoid or control inflation.

(iii) To help low income earners e.g. minimum wage.

(iv) To control the profits of companies (especially monopoly).

(v) To prevent fluctuation of prices of some products e.g. agricultural produce.

(vi) To stabilize the income of some producers, e.g. farmers.

(vii) To make possible planning for future output.

(viii) To accumulate surplus for government.

(b)(i) It stimulates excess demand which cannot be satisfied i.e. shortages in the market.

(ii) It encourages hoarding of commodities by sellers so as to sell above the maximum price.

(iii) It leads to creation of parallel markets or under-the-counter sales. In this case the goods disappear from the open markets.

(iv) It encourages conditional sales. In this case, buyers are forced to purchase what they do not need in addition to what they need.

(v) Shortages result in queues. People have to line up so as to obtain some of the available goods.

(vi) It leads to rationing. Consumers are allocated a specific quantity irrespective of their need.

(vii) Preferential treatment is encouraged. Here, sellers prefer to sell to regular customers, friends and relatives.

Correct Answer: C. entirely on owners

Explanation

The seller is responsible for the maintenance of the property, any repairs and for paying property taxes and insurance, the same as any landlord.

Correct Answer: D. increase demand and create scarcity

Explanation

To prevent prices from falling further, the government may adopt “minimum price legislation” to protect the interests of farmers or producers or suppliers. The immediate effect of this price ceiling is the emergence of excess demand or persistent shortage of the commodity.

Correct Answer: A. it is a major determinant of the standard of living

Explanation

(a)The concept of diminishing marginal utility holds that as additional unit of a commodity is consumed, it adds less and less to total utility and later adds nothing to total utility. Further consumption leads to negative values, then total utility diminishes as reflected in the total curve dropping downwards.

(b) A consumer's utility is maximized when the marginal utility per amount spent on a product is equal to the marginal utility per amount spent on any other product. It can be written mathematically asMux=Muy=Mz

Px Py Pz

Where MUx, Muy, Muz represent the marginal utilities of products x, y, .z

while Px, Py, Pz represent their prices respectively.

In the case of one commodity, a consumer will maximize his utility when the MU of that commodity equals the price of the commodity, e.g. MUx= Px

Correct Answer: D. political instability

Correct Answer: D. ensure that rules on quota production are strictly followed

Explanation

Qd = 20 - 2p

Qs = 6p - 12

(a) Qd = Qs

20- 2P = 6P - 12

8P = 32, p = \(\frac{32}{8}\) = p =4

Qd = 20 - 2p = 20 - 2(4) = 20 - 8 =12

Qs = 6p - 12 = 6(4) - 12 = 24 - 12 = 12

(b) Qs = 6p - 12 = 6(6) -12 = 36 - 12 =24

The magnitude of the excess supply will be 24 - 12 = 12

Correct Answer: A. to meet unforseen contigencies

Explanation

Money held to cater for unforeseen circumstances is referred to as the precautionary demand for money. In this case, money is kept for use in a contingency. That is, people maintain sufficient cash balance to act as a cushion or buffer against unexpected events.

Correct Answer: D. capitalism