problem 1: Specialization is a fundamental need of a developed economy. Describe what is meant by specialization and outline the benefits it brings and the problems it makes.

problem 2:

a) By using a simple demand and supply diagram describe what is meant by the term equilibrium price.

b) Consider the reasons why the demand for a product might raise even though the price remains constant.

problem 3:

a) Define and describe the term monopoly.

b) Describe why monopolies might be considered undesirable.

problem 4:

a) Name and in brief describe the rewards given to each of the four factors of production.

b) Differentiate, by using a suitable diagram, between economic rent and transfer earnings.

problem 5:

a) Define the word national income and in brief describe the three methods by which economists measure Gross Domestic Product (GDP).

b) Describe the main uses of national income statistics.

problem 6:

a) Adam Smith stated that taxes must be equal, certain, convenient and economic. Describe this statement.

b) State the main kinds of direct tax and consider the merits and demerits of raising tax directly from income.

problem 7: Describe the meaning of the term protectionism as applied to international trade and assess the reasons why a government might use protectionist measures.

problem 8:

a) Differentiate with illustrations between visible and invisible trade.

b) What is meant by deficit on current account of the balance of payments and how might a government seek to decrease such a deficit?