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1.(a) What is elasticity of demand for a commodity
(b) Given that at a price of shs.1000 per bag, 20 bags of maize are demanded but when the price changes to shs.800 per bag, 22 bags are demanded. Calculate the elasticity of demand. Show your working
2. a) A newly industrialized country with a population of 40 million people, had its national income estimates during the year 2009 as follows:
Value in dollars (million)
Exports 250000
Consumption expenditure 624000
Investment 300000
Government spending 416000
Imports 210000
Depreciation 10000
Net indirect taxes 50000
Required:
a) (i) Calculate the GNP per capital of the country
ii) What are the challenges associated with using GNP pr capita in measuring the standard of living of accounts
b) Discuss five problems that are encountered in measuring National income in your country.
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