151/1-Pre-National Examination 2023

PRESIDENT’S OFFICE

REGIONAL ADMINISTRATION AND LOCAL GOVERNMENT

ADVANCED CERTIFICATE OF SECONDARY EDUCATION EXAMINATION

FORM SIX PRE-NATIONAL EXAMINATION SOUTHERN ZONE

(MTWARA AND LINDI)

151/1 ECONOMICS 1

MARKING SCHEME

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1. Limitations of the concept of opportunity cost

(i) The forgone alternatives are often not clearly ascertainable
(ii) It is based on the assumption of perfect competition which is not found in
reality
(iii) There may be a difference between individual and social costs
(iv) If factors are prevented from moving or are themselves reluctant to move, to
alternative occupations, then their prices do not reflect opportunity cost
(v) It is not applicable to those factors services which are fixed or specific factors
(Any 5 points @ 02 = 10 marks)

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2. Causes of involuntary unemployment in Tanzania

(i) Fall in demand for a product produced by a certain industry
(ii) Technological progress
(iii) Climatic changes
(iv) Inadequate information system in the labour market
(v) High population
(vi) The poor education system
(Any 5 points @ 02= 10 marks)

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3. (a) (i) P1 =6000Tshs

θ1 =100000kg
P2 =8000Tshs
θ2 =80,000kg
From  
d %∆θD P◦
ep = − × (01 marks)
%∆P θ◦
 
θ1 − θ◦ P◦
= − ×
P1 − P◦ θ◦
 
80000 − 100000 6000
= − × (01 marks)
8000 − 6000 100000
 
−20000 6000
= − ×
2000 100000
 
−120, 000, 000
= −
200, 000, 000
= 0.6
The price elasticity of demand is 0.6 (01 marks)
The economic interpretation is that a one percent change in the price of
beef leads to 0.6 percent change in quantity demanded of beef(02 marks)
(ii)
 
∆θ D P1 + P◦
edp = − × (01 marks)
∆P θ1 + θ◦
 
80000 − 100000 8000 + 6000
= − × (01 marks)
8000 − 6000 80000 + 100000
 
−20000 14000
= − ×
2000 180000
= 10 × 0.077
edp = 0.77
The arc price elasticity of demand is 0.77 (01 marks)
The interpretation is that a one percent change in the price of beef leads
to 0.77 percent change in quantity demanded of beef. (02 marks)
(b) Yes, price elasticity of demand is not the slope of demand curve but the slope
influences the price elasticity of demand
 
d
(i) When price elasticity of demand is zero ep = 0 means that a one
percent change in the own price of a good leads to no change in the
quantity demanded  
(ii) If the price elasticity of demand is infinity edp = ∞ it implies that a one
percent change in the own price of a good leads to an infinite change in
the quantity demanded

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d
(iii) Price elasticity of demand is equal to one ep = 1 means that a one
percent change in the own price of good leads to a one change in quantity
demanded  
(iv) Price elasticity of demand is greater than one edp > 1 means that a one
percent change in price of good leads to greater than one change in
quantity demanded  
(v) Price elasticity of demand is less than one edp < 1 means that a one
percent change in the own price of good leads to less than one change in
quantity demanded
(Any 5 points @ 02= 10 marks)

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4. (a) (i) TP = 6L2 − 0.4L3

At the end of stage one: MPL =APL
∂(TP)
MPL =
∂
∂(6L2 − 0.4L3 )
MPL =
∂
MPL = 12L − 1.2L2
TP
APL =
L
6L2 − 0.4L3
=
L
APL = 6L − 0.4L2
From
MPL = APL
12L − 1.2L2 = 6L − 0.4L2
−0.6L2 + 1.2L2 + 6L − 12L = 0
0.8L2 − 6L = 0
L = 7.5
L ' 8
Amount of labour at the end of stage one is 8 man-hours
(ii) L when TP is at maximum
When TP is at maximum, MPL = 0
MPL = 12L − 1.2L2
12L − 1.2L2 = 0
L(12 − 1.2L) = 0
12 − 1.2L = 0
12
L =
1.2
L = 10
Amount of labour when TP is at maximum i1 10 man-hours
(iii) Labour that maximize MP
This requires amount of labour when MP is maximum. At maximum of
MP find the partial derivative of it and equate to zero to get labour. Sice

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MPL = 12L − 1.2L2

∂(MPL )
= 0
∂L
∂(12L − 1.2L2 )
= 0
∂L
12 − 2.4L = 0
2.4L = 12
12
L =
2.4
L = 5
The number of labour when MP is at maximum is 5 man-hours
(iv) The number of labour that maximize AP
There are two alternatives
* MPL = APL
* partial derivative of APL =0
APL = 6L − 0.4L2
∂(APL )
= 6 − 0.8L
∂L
∂(APL )
But = 0
∂L
6 − 0.4L2= 0
0.8L= 6
6
L =
0.8
L = 7.5
L = 8
When AP is maximum, labourers are 8 man-hours
(b) The factors affecting capital accumulation in the country
(i) Rate of saving
(ii) The level of income
(iii) Willingness to save
(iv) Profit level
(v) Tax level on capital goods
(vi) Government policy
(Any 5 points @ 02 = 10 marks)

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5. (a) (i) TC = 3θ2 + 4θ

2
P = 8+
θ
A firm maximize profit when MR=MC

TR = P · θ 
2
TR = 8 + θ
θ
TR = 8θ + 2
∂(TR)
MR =
∂θ
∂(8θ + 2)
MR =
∂θ
MR = 8
∂(TC)
MC =
∂θ
∂(3θ2 + 4θ)
MC =
∂θ
MC = 6θ + 4
From
MR = MC
8 = 6θ + 4
8 − 4 = 6θ
4
= θ
6
θ = 0.67
The level of output that will maximize profit is 0.67 unit
(ii) Average revenue(AR)
TR
AR =
θ
8θ + 2
=
θ
2
= 8+
θ
but θ = 0.67
2
= 8+
0.67
AR = 10.99
Average revenue 10.99
Marginal revenue 8

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Average cost(AC)
TC
AC =
θ
3θ2 + 4θ
=
θ
= 3θ + 4
but θ = 0.67
= 3(0.67) + 4
AC = 6.01
Average cost(AC) is 6.01
(iii)
Profit = TR − TC
= 8θ + 2 − (3θ2 − 4θ)
= 8θ + 2 − 3θ2 − 4θ
= −3θ2 + 8θ − 4θ + 2
= −3θ2 + 4θ + 2
but θ = 0.67
= −3(0.67)2 + 4(0.67) + 2
Profit = 3.33
The maximum profit of the firm is 3.33
(iv) The firm operates at imperfect competitive market structure. Because
Average revenue is not equal to marginal revenue.
(b) Limitations which prevent a firm from increasing the size of its
operations
(i) Problem of getting additional factors of production
(ii) High transport and distribution cost
(iii) Managerial diseconomies
(iv) Government restrictions
(v) Small market size
(Any 5 points @ 02= 10 marks)

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6. Introduction (01 marks)

Main body (Any 6 points @ 3 = 18 marks)
Forces that led to privatisation on Tanzania
(i) Under performance of the parastatals
(ii) Pressure on the budget
(iii) Corruption and embezzlement of public fund
(iv) Inability of the government to provide services as a result of inefficiency and
increased demand
(v) Low economic growth due to low productivity of parastatals and poor
technology
(vi) Acute shortage of goods and services
Conclusion. (01 marks)

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7. Introduction.
(01 marks)
Any relevant definition Main body (Any 6 points @ 03 = 18 marks)
The following are the conditions for the succession of census
(i) It should be universal
(ii) Presence of trained personnel
(iii) Awareness to the public
(iv) Political stability
(v) Availability of enough fund
(vi) Cooperation from the member of public
(vii) Sufficient infrastructures
Conclusion (01 marks)
Any relevant explanation

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8. Introduction
(01 marks)
Main body (Any 6 points @ 3 = 18 marks)
Limitation of devaluation policy in developing countries
(i) High marginal propensity to import
(ii) The supply of exports of developing countries are inelastic
(iii) The import manufactured capital goods and petroleum products which have
inelastic demand
(iv) They are characterized by political upheavals
(v) Existence of flexible or floating exchange rate system
(vi) Availability of cheap substitutes of synthetic fibers
(vii) High rate of inflation in the developing countries
(viii) Existence of the natural hazards
Conclusion (01 marks)
Any relevant explanation about devaluation.

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