ECONOMICS
November 2017
THE KENYA NATIONAL EXAMINATIONS COUNCIL
DIPLOMA IN SECRETARIAL STUDIES
DIPLOMA IN SALES AND MARKETING
DIPLOMA IN SUPPLY CHAIN MANAGEMENT
DIPLOMA IN BUSINESS MANAGEMENT
DIPLOMA IN ROAD TRANSPORT MANAGEMENT
DIPLOMA IN CO-OPERATIVE MANAGEMENT
DIPLOMA IN INVESTMENT
DIPLOMA IN HUMAN RESOURCE MANAGEMENT
MODULE I
ECONOMICS
1. (a) There are certain production related decisions that a firm needs to make as a result of scarcity of resources. Outline four such decisions. (8 marks)
(b) Country X has lately experienced a dramatic increase in the number of private cars on its roads. Explain six factors that might have led to such an increase in the demand for private cars. (12 marks)
2. (a) There are certain barriers that limit the geographical mobility of labour. Outline five such barriers. (10 marks)
(b) Explain five merits of raising government revenue through indirect taxes. (10 marks)
3. (a) It is common for workers in different occupations to earn different wages.
Explain five factors that may account for such wage differentials. (10 marks)
b) There are certain inefficiencies that may be associated with free market economic system. Highlight five such inefficiencies. (10 marks)
4. (a) Commercial banks perform certain roles in a modern economy. Explain five such roles. (10 marks)
(b) Describe five types of elasticity of supply for a commodity. (10 marks)
5. (a) Developing countries have certain common features that define them. Highlight six such features . (12 marks)
(b) Country Y recently liberalized the prices of a wide range of consumer goods that were previously under government control.
Explain four possible effects of such price liberalization . (8 marks)
6. (a) Describe five types of internal economies that a firm may enjoy from its own growth. (10 marks)
(b) Many developing countries find it necessary to put restrictions on their trade relations with other countries. Outline five reasons that may account for such restrictions. (10 marks)
7. a) Explain five uses to which a country may put its national income statistics. (10 marks)
(b) Explain five reasons that would make a government to tax its citizens. (10 marks)
