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CPA Economics – May 2017 Past Paper & Answers

Unit: Economics

25 Questions

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Questions

Download CPA Economics May 2017 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
Highlight four steps followed in the scientific method used in economics.
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1b
Demand, supply and determination of equilibrium
​​ Enumerate five factors that determine the price elasticity of supply of a commodity.
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1c
Demand, supply and determination of equilibrium
Using indifference curve analysis, derive the Engel's curve of a normal good.
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1d
Introduction to economics
Summarise five applications of opportunity cost in decision making.
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2a
Demand, supply and determination of equilibrium
With the aid of a well labelled diagram, describe the cobweb model as used in economics.
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2b
National income
With reference to the theory of production, discuss five factors that could lead to:
(i) Increasing returns to scale.
(ii) Decreasing returns to scale.
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2c
Demand, supply and determination of equilibrium
(i) Explain the term "cross elasticity of demand."
(ii) The following data relate to a consumer in a certain market:
Price of commodity x
(Sh.)
12
16
20
24
28		Quantity consumed of commodity y
(Units)
80
100
120
140
160


Required:
The cross elasticity of demand. Comment on the relationship between commodity x and commodity y.
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3a
National income
Explain the difference between "real" and "pecuniary" economies of scale of a firm.
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3b
Introduction to economics
Outline four limitations of the cardinal approach to the theory of consumer behaviour.
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3c
Demand, supply and determination of equilibrium
State three reasons why the demand curve slopes downwards.
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3d
National income
The following data relate to the nominal and real gross national product (GNP) levels of a certain economy for the years 2011 and 2016:
Year

2011
2016		Nominal GNP
(Sh. billion)
1,085
1,850		Real GNP
(Sh. billion)
1,085
1,275

Required:
(i) The gross national product implicit price deflator for the years 2011 and 2016. Interpret your results
(ii) Using year 2011 as the base year, determine the inflation rate for the economy.
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3e
Demand, supply and determination of equilibrium
With the aid of an appropriate diagram, explain the condition under which a firm operating under perfect competition market structure would make supernormal profits in the short-run.
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4a
Demand, supply and determination of equilibrium
Highlight four salient features of a monopolistic competition market structure.
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4b
Economic growth, economic development and economic planning
Suggest six economic reforms that could be put in place to boost the growth of the informal sector in developing countries
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4c
Demand, supply and determination of equilibrium
The demand and supply functions of a certain commodity are given as follows:
Qd = 300 - 0.4p
Qs = -400 + 0.6p
Where:
Qd is the demand function.
Qs is the supply function
p is the unit price of the commodity
Required:
The equilibrium price and quantity of the commodity.
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5a
Money and banking
Explain the monetarists view on the quantity theory of money.
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5b
Demand, supply and determination of equilibrium
Enumerate four exceptions to the law of supply.
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5c
Money and banking
Recently, there have been deliberate attempts to control the rate of interest in some of the developing countries
In view of the above statement, explain five advantages of interest rate decontrols in an economy
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5d
National income
(i) Distinguish between the "multiplier" and the "accelerator" as used in national income statistics
(ii) Explain four factors that could limit the application of the multiplier in developing countries.
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5e
Demand, supply and determination of equilibrium
The following information relates to the demand of a commodity in relation to the income of a consumer.
Income
(Sh.)
15,000
29,000		Demand
(Units)
16
7
Required:
The income elasticity of demand of the commodity. Interpret your result.
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6a
Economic growth, economic development and economic planning
Argue the case for and against regional economic integration by developing countries.
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6b
Demand, supply and determination of equilibrium
A firm operating under perfect competition has the following demand and total cost functions:
P-25-50Q
TC = 100-150-600
Where:


P is the price in shillings.
Q is the quantity in units,
TC is the total cost.
Required:
(i) The level of output that would maximise profit.
(ii) The level of output that would minimise costs
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7a
Economic growth, economic development and economic planning
Describe five causes of balance of payment deficits in developing countries
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7b
Introduction to economics
Outline six limitations of the theory of comparative advantage
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7c
Inflation and unemployment
Summarise nine reasons why unemployment is a major policy issue in developing countries
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