Question

Question No. 1:                                                                                                   [3x5=15 Marks]

1. Match each lettered concept with the appropriate numbered description: (1 x 5 = 5 marks)

The following are various concepts

1. Economy
2. Economics
3. Public good
4. Private sector
5. Firms
6. Factors of production
7. Merit good

Match each of the above to the following:

1. In which entrepreneurs organize factors of production. ( ____________)
2. It is made up of all the establishments, organizations and firms possessed by members of the general public. (_______)
3. It is an area in which people make or produce goods and services and exchange them. ( ______________ )
4. The available scarce resources for use in the production of goods and services to satisfy our wants. ( __________)
5. Sometimes a government provides goods and services because it thinks that people ought to benefit from them, even if they cannot afford to buy them, and to benefit the economy. ( _______)

2. Complete the following table (5X1=5 marks)

Determinants of demand for labor	Effect on demand for Capital
Increase in cost of labor
A rise in demand for consumer goods
A decline in the productivity of labor
A decline in wages of labor
Improve in productivity of Capital

3. Complete the following table (5X1=5 marks)

Determinants of demand for labor	Effect on demand for labor
Increase in Cost of Capital
Fall in demand for goods and services
A decline in the productivity of labor
A decline in the price of machines
Fall in productivity of Capital

Answer 1

Question No. 1:   

In which entrepreneurs organize factors of production.(d.private sector)I

It is made up of all the establishments, organizations and firms possessed by members of the general public.(a.economy)

It is an area in which people make or produce goods and services and exchange them. (b. economics)

The available scarce resources for use in the production of goods and services to satisfy our wants. (f. factors of production)

Sometimes a government provides goods and services because it thinks that people ought to benefit from them, even if they cannot afford to buy them, and to benefit the economy. (g. merit goods)

Determinants of demand for labour	Effect on demand for capital
Increase in cost of labour	Since the cost of labour increases,firms will substitute capital for labour and hence demand of capital will increase.
A rise in demand for consumer goods	A rise in demand for goods increase demand for labour for producing more goods.More funds are used to wages and hence demand for capital decreases.
A decline in productivity of labour	Firms will substitute capital for labour and demand for capital will increase
A decline in prices of machine	When prices of machines decreases,firms divert their funds to buy machines for producing goos instead of labor and hence demand for capital increases.
A decline in wages of labour	When wages decreases firms substitute labor for capital and so demand for capital decreases.
Improve in productivity of capital	Firms will substitute capital for labour and demand for capital will increase

Determinants of demand for labour	Effect on demand for Labor
Increase in cost of Capital	Since the cost of capital increases,firms will substitute labor for capital and hence demand of labor will increase.
A fall in demand for goods	A fall in demand for goods decreases demand for labour used in the production of goods
A decline in productivity of labour	Since productivity of labour decreases more labor are to be required to produce same level of goods and hence demand for labor increases.
A decline in prices of machine	When prices of machines decreases,firms divert their funds to buy machines for producing goos instead of labor and hence demand for labor decreases.
A fall in productivity of capital	Firms will substitute labor for capital and demand for labor will increase.