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CPA Economics – December 2025 Past Paper & Answers

Unit: Economics

22 Questions

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Questions

Download CPA Economics December 2025 past paper with detailed answers and marking scheme. This paper is based on KASNEB examination standards and is ideal for revision and exam preparation.

Access the full paper online, download the PDF, or study offline. Each question includes step-by-step solutions to help you understand key concepts in Economics.

Other Economics Past Papers

1a
Introduction to economics
​​(i) Explain FOUR reasons why consumer sovereignty is important in a market economy.  
 
(ii) Analyse FOUR limitations that might hinder the operation of consumer sovereignty in an economy. 
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1b
Demand, supply and determination of equilibrium
​​Explain THREE differences between “individual demand” and “market demand” as applied in economics.
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1c
Demand, supply and determination of equilibrium
​​Discuss THREE applications of elasticity of supply in business decision-making process.
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2a
Demand, supply and determination of equilibrium
​​State SIX effects of subsidies on market equilibrium.
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2b
Demand, supply and determination of equilibrium
​​Analyse THREE advantages of cardinal theory of consumer behaviour as an economic concept.
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2c
Demand, supply and determination of equilibrium
​​With reference to the theory of a firm, argue FOUR causes of wage differentials between firms.
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3a
Demand, supply and determination of equilibrium
​​(i) Explain the concept of the optimal size of a firm. 

(ii) Analyse FOUR factors that determine the optimal size of a firm.
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3b
Demand, supply and determination of equilibrium
​​With reference to market structures, discuss FOUR sufficient conditions for profit maximisation.
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3c
National income
​​Describe the following approaches to measuring national income:      
                                        
(i) The Income Approach.      
 
(ii) The Output or Product Approach.     
 
(iii) The Expenditure Approach.          
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4a
Economic growth, economic development and economic planning
​​Enumerate EIGHT benefits of economic growth.
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4b
Money and banking
​​Explain THREE roles of non-banking financial institutions in the economy.
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4c
Demand, supply and determination of equilibrium
​ ​​Truck Enterprises is a firm that deals with recycling of waste bins in a fast-growing urban area. The firm estimates that it will incur a fixed cost of Sh.2,000,000 and an average variable cost of Sh.5,000 per recycled waste bin.  
 
Required:  
(i) Calculate the number of recycled bins that the firm must produce in order to break-even if the selling price per unit is Sh.80,000.           
 
(ii) If the fixed costs and the variable costs were to increase by Sh.50,000 and Sh.5,000 respectively, determine the new break-even number of waste bins. 
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5a
Demand, supply and determination of equilibrium
​ ​​The following equation represents the demand function for a firm operating under perfect competition: 
 
Q = 50P 
 
Required: 
(i) Determine the marginal revenue function of the firm.      
 
(ii) The profit maximising level of output of the firm given that the total cost function of the firm is given as:  
 
TC = 36 + 20Q   
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5b
National income
​​(i) Explain the term “accelerator concept”.      
 
(ii)  Highlight FIVE benefits of the accelerator theory to an economy. 
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5c
Inflation and unemployment
​​Summarise SIX economic effects of urban unemployment in developing countries.
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6a
Introduction to economics
​​Highlight FOUR characteristics of economic resources.
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6b
Inflation and unemployment
​​Describe FOUR strategies that a country might take to minimise external debt problem.
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6c
Economic growth, economic development and economic planning
​​Explain FOUR roles of the budget in the economic growth and development of a country.
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7a
Demand, supply and determination of equilibrium
​ ​​The demand for a commodity is 20 units when the prevailing market price  is Sh.80 per unit. However, when the price per unit rises to Sh.100 the quantity demanded rises to 30 units. 
 
Required: 
(i) Arc elasticity of this commodity. 
 
(ii) Point elasticity of this commodity. 
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7b
Demand, supply and determination of equilibrium
​​Trade unions are workers organisations whose objective is to protect the interest of their members. With reference to the above statement, explain FOUR basis of higher wage claims for their members.
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7c
National income
​ ​​A hypothetical economy is represented by the following information: 

 Autonomous consumption = 8,000 
 Marginal propensity to consume = 0.5 

Required: 
Derive the savings function.
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7d
Demand, supply and determination of equilibrium
​​Highlight SIX causes of market failure in an economy.
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