Economics (2017) | Study Mode

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Question 41
A
price maker
B
price taker
C
price seeker
D
a and b
Explanation
A perfect market may be defined as one in which buyers or sellers cannot influence the price of goods and services. That is, the buyers or sellers are price taker since there exst a common price for commodities throughout the market.

Correct option: B
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Question 42
A
36.6
B
22
C
30.6
D
26
Explanation
Given C = 10 + 0.6Y when Y = 20
Substitute for the value of Y in the equation to calculate the actual value for C
Therefore, C = 10 + 0.6(20)
C = 10 + 12
C = 22.00

Correct option: B
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Question 43
A
Distribute money to citizens
B
support better production
C
remove competition
D
prepare budget
Explanation
Opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. Opportunity cost helps the government in the preparation of budget, since it assists in the effective allocation of scarce resources to certain sector of the economy. It helps in making certain decision e.g. the priority areas that may require immediate attention.

Correct option: D
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Question 44
A
Grants, aids and borrowing
B
Taxs, fees, licenses and fines
C
Interest, dividends, profits and earnings
D
personal income, disposable income and transfer earnings
Explanation
Personal income, disposable income and transfer earnings are sources of individual income after
payment of taxs and charges left to be spent or saved as one wishes.
Source of Government revenue include Grants, aids, borrowings, taxs, fees, licences, fines,
dividends, profit and many others but not personal income. Disposable income and transferable income.

Correct option: D
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Question 45
Economics (2017) Q 38 image
A

50

B

70

C

350

D

150

Explanation
This is because the average product (AP) is found by dividing total product by the input of labour. For exmple, a company that produce 100kg of product with 10 workers has an average product of 10.

For a detailed exlanation, taken a company A for exmple. If company A employs only one worker and with one worker, total production is 20kg each hour. This gives an average product of 20kg. Now if company A employs two workers and the total production is 50kg, the average product for the two workers give 25kg. Also when company A employs three workers and the total hourly production increase to 90kg, these means 30kg is the average product for the three workers and so on.
In this case, 3 workers produce 150kg of output therefore, the Average product of labour for the 3rd unit is 50kg. Given by:
Average product= \(\frac{Tex{Total product}}{Tex{Variable product}}\)

Correct option: A
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Question 46
A
a central bank
B
a money market
C
an insurance
D
a stock exhange
Explanation
Money market can be defined as a market for short term loan. The market consists of institution
or individuals who either have money to lend or wish to borrow on a short term basis. The central
bank is the sole authority in the banking industry and act as banker to the government and the
commercial banks.
The stock market is an instrument for raising fund for limited liability companies which have
shares of the company to give out in exhange for fund.
Insurance company are financial institution that are concerned with insurance. Insurance company
indemnify the insured against loss which he may suffer in the future upon payment of a premium.

Correct option: B
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Question 47
A
Limited partnership
B
limited liability company
C
private partnership
D
joint stock partnership
Explanation
Limited partnership is one who has agreed to contribute a certain sum to a partnership in business and is prevented by law from taking any active part in the management and administration of the business. He is liable for debts and obligations of the partnership only up to the amount of capital he has contributed. A limited partner has limited liability.

Correct option: A
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Question 48
A
Poll tax
B
personal income tax
C
Company tax
D
exise duties
Explanation
Indirect taxrefers to taxs which are imposed or levied on goods and services. The producers bear the initial burden of taxbefore shifting them to the final consumers in the form of higher price.

Correct option: D
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Question 49
A
low interest charges on loans
B
improvements in infrastructure
C
low foreign exhange rate
D
high standard of living
Explanation
This is one of the reasons government participates in the location of industries. When such industries are located, goods are made available and the people get employment and earn income hence, their standard of living will be improved

Correct option: D
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Question 50
A
Traditional budgeting focuses on goals and objectives
B
Zero based budgeting produces a single level of appropriation for an activity
C
Traditional budgeting starts with last year's funding appropriation
D
Zero based budgeting does not systematically consider alternatives to current operations
Explanation
Zero-Based budgeting and traditional budgeting are the two predominantly used budgeting techniques. Zero-based budgeting is a budgeting method where current year's budget is prepared from the scratch i.e. taking the base as zero. The old and the new activities of the business are ranked according to their importance and based on that, resources are allocated to each activity without considering the past budgets or achievements.

Traditional budgeting is a method of preparation of the budget in which the last year's budget is taken as the base. Current year's budget is prepared by making changes to previous year's budget by adjusting the exenses based on the inflation rate, consumer demand, market situation etc.

In case of zero-based budgeting, it is easy to eliminate an exsting item or add a new item to the current budget, as zero-based budgeting is a creation of entirely new budget from the ground. In other words, zero-based budgeting is more flexble in nature.

Correct option: C

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