Category: Economics
Distinguish between explicit costs and implicit costs
Explicit costs are direct costs incurred by the firm during production process e.g. costs of labour, raw materials, power, water etc. whereas implicit costs are ... Read More
Distinguish between dividends and shares
Dividends are part of a company’s profit that a firm periodically pays out to its shareholders as a return on their capital contribution. Whereas shares ... Read More
Explain the meaning of Giffen paradox
Giffen paradox is a situation where the quantity demanded of inferior good increases whenever there is an increase in its price. Read More
Explain the meaning of complementary factors of production
Complementary factors of production are factors inputs in the process of production that are used together to enhance one another e.g. capital and labour Read More
How is monopoly controlled?
Nationalization of monopoly firm(s) by the state. By forming regulatory bodies such as water and electricity to check on monopoly decisions e.g. through price legislation ... Read More
Describe the basis of monopoly power.
The basis of monopoly refers to the origin or causes of monopoly powers Passible causes/origin of monopoly power include Legal barriers comprising copyrights, licenses, patents, ... Read More
What is ‘Monopoly’
Definition: A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as ... Read More
What are determinants of consumption in society?
The level of disposable income. income which is available to individuals and households after taxation. When this income is high then consumption levels are high ... Read More
With examples distinguish between a ‘leakage’ and an ‘injection’ in the circular flow of income.
‘Injections’ are the introduction of income into the flow, such as additions to investment, government expenditure and exports. “Leakages” are the withdrawal of income from the ... Read More
What problems are faced in administering the buffer stock and stabilizing fund policies
LDCs are poor and therefore cannot afford purchasing the excess surplus due to limited funds There are inadequate storage facilities especially for perishable goods such ... Read More
Distinguish between buffer stock and stabilizing fund policies
A buffer stock is a system or scheme which buys and stores stocks at times of good harvests to prevent prices falling below a target ... Read More
Why is marginal productivity theory rarely used in determining wages?
The theory assumes that there is no government interference, but government usually interferers in wage determination The theory assumes the law of diminishing returns, but ... Read More
Explain what is meant by marginal revenue products.
The marginal revenue product is the increase in total revenue resulting from the employment of each additional labour unit. Marginal revenue product in a perfectly competitive ... Read More
Why is it difficult to attain full employment in an economy?
There is inadequate information about where jobs are; where jobs are advertised in newspapers most unemployed people fail to get this information because they cannot ... Read More
What is meant by the term full employment
Full employment refers to a situation where all factors of production especially labour are fully utilized. It is also defined as a state where the ... Read More
What are the functions of profit in an economic system?
Profit plays the following roles in economic systems: It provides to entrepreneurs with reward for risk bearing without which he/she could not undertake production It ... Read More
Explain the concept of profits as used in economics.
Profit is the return to an entrepreneur for bearing the uninsurable risks of production, Or it is the difference between total revenue and total cost. ... Read More
What is the importance of the concept of price elasticity to government, consumer and producers.
Government Helps government to regulate prices. I.e. In order to protect the interest of consumers’ government fixes the maximum price of the commodity with inelastic ... Read More
What is the relevance of the concept of price elasticity to producer
Producer It helps a producer in determining prices for his commodities. If a commodity has elastic demand, the producer will reduce the price and charge ... Read More
What is the relevance of the concept of price elasticity to consumer
It helps in determining incidence of tax. For goods whose demand is elastic, the burden is borne by the producer and for those whose demand ... Read More
What is the relevance of the concept of price elasticity to government.
It helps government in currency devaluation. The government can devalue it currency if her imports and exports have elastic demand and supply such that as ... Read More
Outline the factors that determine the price elasticity of demand of a product.
Availability of substitute The proportion of income spent on the product Habit forming products e.g. cigarettes and alcohol. The number of uses to which a ... Read More
What is Price Elasticity of Demand?
Price Elasticity of Demand (PED) is an economic tool that measures the change in quantity demanded of a product when there is a fluctuation in ... Read More
List instruments of credit
Over drafts Bills of exchange Credit cards Securities Promissory notes: bonds, checks, Read More
Distinguish between liquid money from money in circulation
Liquid money is money in cash form possessed by the public while money in circulation refers to liquid cash/ money in cash form in the ... Read More
What is liquidity in economics
Liquidity refers to how quickly a financial assets can be used to buy a good or service. For example cash is very liquid because can ... Read More
What is liquidity in economics?
Liquidity refers to how quickly a financial asset can be used to buy a good or service. For example, cash is very liquid. Cash of ... Read More
What are non-economic factors affect agricultural labour productivity in a country like Uganda
Soil fertility Climatic changes Political stability Public opinions Pests and diseases Cultural/traditional practices Levels of skills of agricultural worker Population structure Read More
Explain what agricultural labour productivity is.
Agricultural labour productivity is output per unit of labour input used in agricultural production process Read More
What are non-economic factors affect agricultural labour productivity in Uganda
Soil fertility Climatic changes Political stability Public opinions Pests and diseases Cultural/traditional practices Levels of skills of agricultural worker Population structure Read More
Why does black market occurs?
To avoid taxes Buying and selling goods prohibited by law such as cocaine or cannabis Hoarding of commodities due to expectation of higher prices To ... Read More
What is meant by the term “black market”?
A black market is any market where the exchange of goods and services takes place in order to facilitate the transaction of illegal goods or to ... Read More
With examples explain product differentiation
Product differentiations is a practice by producers in imperfect market to create artificial differences between goods which perform or serve similar functions. Product differentiation involves ... Read More
Giving examples, what is supplementary cost
Supplementary costs are also called overhead costs or fixed costs. They are costs incurred that do not vary or change with changes in the output ... Read More
With illustrations define producer surplus
Producer surplus is the difference between what the producer is willing to charge and what he actually charges for the commodity when what he actually ... Read More
With illustrations define and calculate the consumer’s surplus
Consumer surplus is the difference between what the consumer is willing and able to pay for the commodity and what he actually pays, whereby what ... Read More
Give reasons why a beggar-my-neighbor policy may be adopted
to protect the domestic infant industry by encouraging consumption of domestic goods Improve balance of payment by reducing imports and increasing exports. Increase the level ... Read More
What is meant by beggar-my-neighbor policy in economics?
It is a policy adopted by a country as a relation or a reaction to policies by neighboring country to benefit in its own economy ... Read More
How is rent related to transfer earnings in economics
Transfer earnings are the minimum amount labour must be paid in order to keep it in its present use. It is an opportunity cost of ... Read More
Suggest ways and means of cutting down government expenditure without interfering with the economic development of the country.
Fighting corruption Privatize public enterprises Publicize and offer family planning methods to reduce on high population growth rate Reduce on the frequent foreign trips by ... Read More
Account for the recent increase government expenditure in Uganda
Funding big projects such as road and energy High population growth which gives rise to many dependants High corruption rate Funding of inefficient public enterprises ... Read More
With examples show how recurrent government expenditure differ from development expenditure.
Recurrent expenditures is government expenditure on the day to day running of state e.g. paying salaries of public servants, expenditure on fuel and so on. ... Read More
Outline advantages for sectoral planning for a country like Uganda.
Sectoral planning is planning that deals with particular sectors of national economy such agriculture, industry, education, etc. Advantages of sectoral planning Allocation of resource according ... Read More
Why is it necessary for your country to prepare national development plans.
Instead of relying on market and price mechanism, it is necessary for the State to prepare national economic development plan to coordinate all factors of ... Read More
Explain giving examples, the concept of dualism in an economy
Economic dualism, most broadly defined, refers to the coexistence of two or more economic systems. Examples are Sectoral dualism this refers to the existence of a ... Read More
Why would export promotion be a better development strategy than import substitution?
Export promotion industrial strategy increases the foreign earnings therefore improves the balance of payment position of a country while Import substitution only save foreign exchange ... Read More
What could be used to encourage the movement of labour force from urban areas to rural areas in your country
Improving economic infrastructure like roads and electricity in rural areas. This will encourage people to move back from urban to rural area Extending social services ... Read More
Disadvantages/costs of economic growth
It leads to rural-urban migration. As the economy grows, people tend to shift from rural areas to urban centers where there are better opportunities as ... Read More
The benefits/advantages of economic growth
It increases the volume of goods and services that in turn increase human choice hence increases consumer sovereignty It increases a country’s tax base and ... Read More
Disadvantages of high population growth rate
Increase dependence burden Reduced investment since there is high consumption rather than capital good Worsens income inequality as a result of small working group Worsen ... Read More
Advantages and disadvantages of retiring population
Advantages of retiring population Retiring population created demand of greater demands for health care services and retirement homes. Provides labour for care takers An ageing ... Read More
Advantages of high population growth rate
Increase in market due to high demand for goods and service. Increase in labour force that leads to high production Increased competition leads to efficiency ... Read More
Disadvantages of young population
There is high government expenditure on services like schools and hospital. There shortage of labour Low tax revenue since few people are employed Read More
Advantages of young population
There is a market for commodities consumed by young people such as textbooks, toys, biscuits There are lots of potential workers for the future. There ... Read More
Explain why the public sector in your country has failed to achieve its objects/challenges faced when providing public goods
Limited capital to service vital services such as education and health. Poor infrastructure such as roods hinder prompt delivery of goods and services Slow decision ... Read More
Outline any four factors which could be indicated by a plan strategy
Plan formulation (identification of aims and objectives to be achieved) Setting plan targets (reducing unemployment by 10%) Formulation of strategies Plan acceptance and adoption Plan ... Read More
Give commercial policy instruments used by governments
Commercial policy instruments include: Tariffs Quotas Exchange rate policy Dumping Trade agreements Trade embargo Subsidies State trading Read More
Define commercial policy
These are measures undertaken by the government to influence the value, volume and direction of domestic/international trade in order to benefit from it. Read More
What assumptions are made in the theory of international trade for countries to benefit from it?
The theory of trade is based on the following assumptions The amount of labor and capital in two countries differ (difference in endowments) Technology is ... Read More
Why would you expect one firm to make super normal profit while another makes losses while they operate under conditions of perfect competition?
In a perfectly competitive market, firms are price takers which mean that they have no bearing on the market price. The one making supernormal profit ... Read More