Correct Answer: A. legal monopoly

Correct Answer: B. increase the demand for locally made goods

Explanation

One of the main reasons for the introduction of tariffs and quotas is to support local industries and discourage imports. When goods are imported at a high cost, they would be exchanged for high prices as well. With this, local industries can easily sell locally produced goods are cheaper rates thereby increasing the market and demand for it.

Correct Answer: B. economic goods

Explanation

An economic good is a consumable item that is useful to people but scarce in relation to its demand, so that human effort is required to obtain it. People work towards owning these goods because they are essential. Example include Food, clothing and housing.

Correct Answer: C. Which goods and services to be produced

Correct Answer:

Explanation

(a) Direct taxation refers to taxes on incomes and properties of individuals and organizations e.g. personal income tax, profit tax. On the other hand, indirect taxation refers to taxes on goods and services e.g. excise duties, custom duties etc.

(b)(i) In developing countries where incomes are generally low, indirect taxes yield more revenue to the government.

(ii) where unemployment is high, indirect taxes yield more revenue.

(iii) it is cheap and easy to collect, e.g. custom duties.

(iv) it has a wider coverage to collect, e.g. custom duties

(v) it is not easy to evade. Consumers pay as they consume the commodities

(vi) it is not a disincentive to work.

(vii) it used to discourage consumption of harmful goods.

(viii) it used to protect infant industries.

(ix) it used to correct balance of payments deficit.

(x) it used to prevent dumping.

Correct Answer: A. substitutes

Explanation

(a)(i) Textbook and shirt

(ii) Because the textbook and the shirt are the items at the top of his scale of preference which can be purchased with his $7.00

(b)(i) The shoes, the trouser and the notebook

(ii) Because those three items are the next best alternatives, which can be purchased with $7.00

(c)(i) Textbook, shirt and shoes

(ii) Trouser, the notebook and pay $6.0 out of his school fees.

(d) A scale of preference is a list of wants arranged in order of importance. Opportunity cost is the alternative want or commodity forgone

(e) A scale of preference helps an individual, a firm or a government to make rational use of available resources to satisfy the most important wants.

Correct Answer: B. Technological change

Explanation

A technological change is an increase in the efficiency of a product or process that results in an increase in output, without an increase in input. This will result in an increase in productivity

Correct Answer: A. unit cost of production falls

Explanation

One of the main advantages of large scale production is economies of scale. That is a proportionate saving in costs gained by an increased level of production.

The large scale production reduces the cost of production to a considerable extent. For instance, assuming a manufacturing company consumes 50 litres of fuel to produce 1000 units of a product. The company would most likely use same 50literes of fuel in the production of 1500 units of output.

Correct Answer: B. price level