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Questions
1a
Demand, supply and determination of equilibrium
(i) Highlight four factors that determine the supply of a good or service. (ii) Using appropriate diagrams, explain the difference between "a movement along a supply curve" and "a shift in a supply curve".
The government has given a subsidy on the consumption of commodity Y. Using a diagram for illustration, explain the effect of the above action on market equilibrium for commodity Y.
The data below represents the national income of a certain economy in trillions of shillings:
Y = C + 1 + G + (X - M) C = 100 + 0.6Yd T = 10 + 0.2Y I = 40 G = 50 (X - M) = 30
Where: Y = National Income c = Consumption expenditure I = Investment G = Government expenditure Yd = Disposable income T = Taxes X = Exports M = Imports
Required: The equilibrium level of;
(i) National income. (ii) Consumption. (iii) Taxes.
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