QUESTION 1

a) Explain the different types of unemployment that exist

b) Critically examine how monetary policy can be used to deal with inflation

c) Critically examine how fiscal policy can be used to deal with unemployment

d) What are the causes of inflation?

QUESTION 2

(a) Differentiate between price, income and cross elasticity of demand

(b) Would you agree that, in order to maximize total revenue, the manager of a supermarket must understand and apply the concept of price elasticity of demand? Explain your reasoning, with the help of appropriate examples and diagrams.

(c) Discuss how a supermarket can sell many products at very low prices, despite their higher fixed costs

QUESTION 3

(a) With reference to the characteristics of market structure, explain why the market for powdered milk in Mauritius is an appropriate example of monopolistic competition while the soft drink industry an appropriate example of oligopoly

(b) Using appropriate diagrams, explain and illustrate how a firm under monopolistic competition reaches equilibrium in the short run and in the long run

(c) Explain the different pricing strategies of firms under oligopoly

QUESTION 4

(a) Discuss whether international trade between countries is always beneficial

(b) How may domestic markets be protected from foreign competition?

(c) What are the economic reasons for such protection?

QUESTION 5

Write short notes on the following:-

(a) Public and merit goods

(b) Law of diminishing returns

(c) Fixed and variable costs

(d) Phillips curve

(e) Cannons of taxation