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CPA Economics – Pilot September 2015 Past Paper & Answers

Unit: Economics

22 Questions

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Questions

Download CPA Economics Pilot September 2015 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
National income
​​(i) Distinguish between "gross domestic product" and "gross national product".

(ii) Give the reasons for the lower value of the gross national product in the less developing countries.

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1b
National income
​ ​​ The following data represents economic transactions of a hypothetical economy:

Sh. "million"
General government final expenditure
6,750
Taxes on expenditure
4,250
Transfer payments
675
Social security contributions
2,500
Net property income from abroad
250
Consumers expenditure
18,500
Subsidies
750
Gross domestic fixed capital formation
5,750
Corporate income tax
750
Undistributed profits
500
Personal income tax
1,000
Imports of goods and services
9,250
Exports of goods and services
8,750
Depreciation
3,500

Required: 
Calculate: 

(i) Gross national product. 

(ii) Net national product. 

(iii) National income. 

(iv) Personal income. 

(v) Disposable income.
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1c
Money and banking
​​ Briefly explain five functions of money.
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2a
Demand, supply and determination of equilibrium
​​ Highlight five features of a firm under perfect competition.
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2b
Demand, supply and determination of equilibrium
​ ​ ​​With the aid of a diagram, show that MC=MR is just a necessary but not sufficient condition for profit maximisation.
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2c
Demand, supply and determination of equilibrium
​ ​​ In the short-run, a monopolist does not necessarily have to make profits; he can make losses. Whether he makes a profit or a loss depends on the position of the short-run total cost curve (SATC) at the short-run equilibrium. 

Using an appropriate diagram, discuss the conditions for the loss minimisation of a monopolist.
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2d
Demand, supply and determination of equilibrium
​​Under monopolistic competitive markets the products are usually differentiated yet they are very close substitutes for

one another.

Explain the main types of product differentiation in monopolistic competitive market. 

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3a
Demand, supply and determination of equilibrium
​​ Giving examples, distinguish between "fixed costs" and "variable costs".
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3b
Demand, supply and determination of equilibrium
​ ​​A firm operating in the short-run period has a fixed cost of Sh.8,600. The table below shows its total variable cost and the units of output:

Units of output:
0
1
2
3
4
5
6
7
8
9
10
Total variable costs (Sh.): 
0
3040
5680
8000
10080
12000
14000
16240
18960
22480
26880

Required: 
For each level of output, calculate the firm's total cost, average total cost, average variable cost, average fixed cost and marginal cost giving your solution in columnar form/tabular form.
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3c
Demand, supply and determination of equilibrium
​ ​​Using an appropriate diagram for each case, explain the three properties of isoquants.
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4a
Money and banking
​​One of the main functions of a central bank is the effective implementation of the monetary policies.

Discuss the main instruments of monetary policies.

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4b
Economic growth, economic development and economic planning
​ ​​ Distinguish between "economic growth" and "economic development".
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4c
Inflation and unemployment
​​ Briefly explain the effects ofhigh levels of inflation in an economy.
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5a
Demand, supply and determination of equilibrium
​ ​​Using the indifference curve margins, discuss how the consumers equilibrium is obtained. Use an appropriate diagram to illustrate your answer.
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5b
Demand, supply and determination of equilibrium
​ ​ ​ ​​With the help of well illustrated diagrams, draw the substitution effect and income effect of: 

(i) A normal good. 

(ii) An inferior good.
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5c
Demand, supply and determination of equilibrium
​​Briefly explain the concept of elasticity of demand in the economic management policy decision making.
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6a
Inflation and unemployment
​​Most developing countries experience deficits in their balance of payments.

Explain the various methods that could be used by these countries to correct deficits in their balance of payments. 

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6b
Inflation and unemployment
​​ Explain three types of unemployment.
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6c
Inflation and unemployment
​ ​​Using the Phillips curve, explain the relationship between unemployment and inflation.
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7a
Demand, supply and determination of equilibrium
​​ Briefly explain five factors that could affect the price elasticity of supply.
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7b
Demand, supply and determination of equilibrium
​​ (i) State the law of diminishing marginal returns. 

(ii) With the aid of a diagram, explain the three stages of production according to this law.
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7c
Demand, supply and determination of equilibrium
​​ Highlight five functions of trade unions.
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