QUESTION TWO(20 Marks)

Match the economic concepts given in COLUMN A with its description in COLUMN B. Write down the question number and the correct letter next to it. E.g. 2.11 A

COLUMN A

COLUMN B

2.1 Normal profit

A Monetary payments for the factors of production and other

inputs bought or hired by the firm.

2.2 Explicit costs

B These are goods exactly the same

2.3Inferior goods

C This is a market structure characterised by the existence of one

seller who provides a unique product.

2.4 Diseconomies of scale

D This is when a percentage change in quantity demanded is

greater than the percentage change in price.

2.5 Macroeconomics

E Opportunity costs not reflected in monetary payments of factors

of production

2.6 Elastic demand

F Occur when the marginal product of an additional worker

exceeds the marginal product of the previous worker

2.7 Long run

G This is the change to the total output resulting from the

employment of one more unit of a variable factor.

2.8 Command economy

H This is a time period whereby all inputs used in production by a

given firm can be varied.

2.9 Marginal product

I The government solely solves all the economic problems.

2.10 Perfect competition

J As income increases, the quantity demanded for these goods

declines.

K This is when average cost increases as output increases.

L This refers to a period which is 5 years or more.

M Measures the responsiveness of the quantity supplied to a

change in price

N This is when firms are allowed to charge whatever price they

want to different customers.

O This branch of economics focuses on the whole economy as

opposed to individual parts.

P These are goods which does not have economic value.

Q Is equal to the best return that the firm's self-owned resources

could earn elsewhere.

R This occurs when none of the individual market participants can

influence the price of the product.