3. Write short notes on the following: (i) Marginal cost (4 marks) (ii) Wants (4 marks) (iii) Scarcity (4 marks) (iv) Choice (4 marks) (v) Opportunity cost (4 marks) 4. Explain four basic economic problems of a society. (20 marks) 5. (a) Define the term utility. (4 marks) (b) Explain three types of utility. (12 marks) (c) Give two differences between total and marginal utility. (4 marks) 6. (a)What is public finance? (5 marks) (b) Explain five objectives of fiscal policy. (15 marks) 7. (a) Define price legislation. (4 marks) (b)Explain four objectives of price control policy. (16 marks) 8. (a) What is financial institution? (5 marks) (b) Explain the following: (i) Money market (5 marks) (ii) Insurance companies (5 marks) (iii) Capital market (5 marks) 9. (a) With the aid of a diagram, explain the burden of indirect tax on commodities whose demand is perfectly inelastic and elastic respectively. (12 marks) (b) Discuss four reasons why government imposes taxes. (8 marks) 10. (a) What is human capital development? (5 marks) (b) Discuss five characteristics of human capital. (15 marks) 11. (a) Define economic growth. (4 marks) (b) Expatiate on four conditions necessary for rapid economic development. (16 marks) 12. Mention and explain five features of a perfectly competitive market. (20 marks)

## Step1: Define and Explain Marginal Cost<br />### Marginal cost is the additional cost incurred by producing one more unit of a good or service. It is calculated by the change in total cost divided by the change in quantity produced. Marginal cost is crucial for decision-making in production as it helps firms determine the optimal level of output.<br /><br />## Step2: Define and Explain Wants<br />### Wants are desires or wishes for specific goods or services. Unlike needs, which are essential for survival, wants are not necessary but are sought after to improve quality of life. Wants are unlimited and vary from person to person, driving economic activity and consumption.<br /><br />## Step3: Define and Explain Scarcity<br />### Scarcity refers to the fundamental economic problem of having limited resources to meet unlimited wants and needs. It necessitates making choices about how to allocate resources efficiently. Scarcity forces individuals and societies to prioritize and make trade-offs.<br /><br />## Step4: Define and Explain Choice<br />### Choice involves selecting among alternatives due to the presence of scarcity. Because resources are limited, individuals and societies must choose how to allocate them to satisfy the most pressing needs and wants. This process is central to economic decision-making.<br /><br />## Step5: Define and Explain Opportunity Cost<br />### Opportunity cost is the value of the next best alternative forgone when making a decision. It represents the benefits that could have been obtained by choosing the alternative option. Opportunity cost is a key concept in economics as it highlights the trade-offs involved in every decision.<br /><br />## Step6: Explain Four Basic Economic Problems of a Society<br />### The four basic economic problems are:<br />1. **What to produce?** - Deciding which goods and services to produce based on needs and wants.<br />2. **How to produce?** - Determining the methods and resources to use for production.<br />3. **For whom to produce?** - Deciding who will receive the goods and services produced.<br />4. **How to ensure economic stability and growth?** - Maintaining a stable economy and promoting growth through policies and regulations.<br /><br />## Step7: Define Utility<br />### Utility is the satisfaction or pleasure derived from consuming a good or service. It is a measure of the usefulness or value that a consumer receives from a product.<br /><br />## Step8: Explain Three Types of Utility<br />### The three types of utility are:<br />1. **Form Utility** - Created by converting raw materials into finished products.<br />2. **Place Utility** - Created by making goods available at locations where they are needed.<br />3. **Time Utility** - Created by making goods available at the time they are needed.<br /><br />## Step9: Differences Between Total and Marginal Utility<br />### Total utility is the overall satisfaction obtained from consuming a certain quantity of goods, while marginal utility is the additional satisfaction gained from consuming one more unit of a good. Total utility increases as more units are consumed, but marginal utility typically decreases.<br /><br />## Step10: Define Public Finance<br />### Public finance is the study of how governments raise and spend money. It involves the management of public revenue, expenditure, and debt to achieve economic stability and growth.<br /><br />## Step11: Explain Five Objectives of Fiscal Policy<br />### The five objectives of fiscal policy are:<br />1. **Economic Stability** - Reducing fluctuations in the economy.<br />2. **Economic Growth** - Promoting long-term economic growth.<br />3. **Employment** - Achieving high levels of employment.<br />4. **Equitable Distribution of Income** - Reducing income inequality.<br />5. **Efficient Resource Allocation** - Ensuring resources are used efficiently.<br /><br />## Step12: Define Price Legislation<br />### Price legislation involves government intervention to set or control prices of goods and services to prevent unfair pricing and protect consumers.<br /><br />## Step13: Explain Four Objectives of Price Control Policy<br />### The four objectives of price control policy are:<br />1. **Preventing Inflation** - Controlling excessive price increases.<br />2. **Ensuring Affordability** - Making essential goods affordable.<br />3. **Protecting Consumers** - Preventing exploitation by producers.<br />4. **Stabilizing Markets** - Reducing price volatility.<br /><br />## Step14: Define Financial Institution<br />### A financial institution is an organization that provides financial services, such as banking, insurance, and investment management, to individuals and businesses.<br /><br />## Step15: Explain Money Market<br />### The money market is a segment of the financial market where short-term borrowing and lending occur. It deals with instruments like treasury bills, commercial paper, and certificates of deposit.<br /><br />## Step16: Explain Insurance Companies<br />### Insurance companies provide risk management services by offering policies that compensate for financial losses due to unforeseen events. They collect premiums and pay out claims.<br /><br />## Step17: Explain Capital Market<br />### The capital market is a financial market where long-term debt and equity securities are traded. It includes the stock market and bond market, facilitating capital raising for businesses and governments.<br /><br />## Step18: Explain Burden of Indirect Tax with Diagram<br />### The burden of an indirect tax on commodities with perfectly inelastic demand falls entirely on consumers, as they cannot reduce quantity demanded. For elastic demand, the burden is shared between consumers and producers, with consumers bearing less of the tax burden.<br /><br />## Step19: Discuss Four Reasons for Government Imposing Taxes<br />### The four reasons are:<br />1. **Revenue Generation** - Funding public services and infrastructure.<br />2. **Redistribution of Income** - Reducing income inequality.<br />3. **Economic Stability** - Controlling inflation and economic cycles.<br />4. **Behavioral Changes** - Discouraging harmful activities (e.g., smoking).<br /><br />## Step20: Define Human Capital Development<br />### Human capital development involves investing in education, training, and health to improve the productivity and capabilities of the workforce.<br /><br />## Step21: Discuss Five Characteristics of Human Capital<br />### The five characteristics are:<br />1. **Education** - Knowledge and skills acquired through learning.<br />2. **Experience** - Practical knowledge gained from work.<br />3. **Health** - Physical and mental well-being.<br />4. **Training** - Specialized skills and competencies.<br />5. **Innovation** - Ability to create and implement new ideas.<br /><br />## Step22: Define Economic Growth<br />### Economic growth is the increase in the production of goods and services in an economy over time, typically measured by GDP.<br /><br />## Step23: Explain Four Conditions for Rapid Economic Development<br />### The four conditions are:<br />1. **Capital Accumulation** - Investment in physical and human capital.<br />2. **Technological Innovation** - Advancements in technology.<br />3. **Institutional Framework** - Effective legal and regulatory systems.<br />4. **Political Stability** - Stable and supportive government policies.<br /><br />## Step24: Explain Five Features of a Perfectly Competitive Market<br />### The five features are:<br />1. **Many Buyers and Sellers** - No single entity can influence the market price.<br />2. **Homogeneous Products** - Goods are identical and interchangeable.<br />3. **Free Entry and Exit** - No barriers to entering or leaving the market.<br />4. **Perfect Information** - All participants have full knowledge of prices and products.<br />5. **Price Takers** - Firms accept the market price as given.