Kasneb exam paper atd
CA14 & CF14 Page 1
Out of 2
CERTIFIED PUBLIC ACCOUNTANTS (CPA)
CERTIFIED INVESTMENT AND FINANCIAL ANALYSTS (CIFA)
FOUNDATION LEVEL
ECONOMICS
TUESDAY: 21 April 2026. Afternoon Paper. Time Allowed: 3 hours.
This paper consists of five (5) questions. Answer ALL questions. Marks allocated to each question are shown at the
end of the question. Do NOT write anything on this paper,
QUESTION ONE
(a) Explain FOUR characteristics of a good economic system. (4 marks)
(b) (i) Define the term “marginal utility” as used in economics. (2 marks)
(ii) With the aid of a well-labelled diagram, illustrate the law of diminishing marginal utility and explain its
implication for consumer behaviour. (4 marks)
(c) State FOUR causes of inflation in an economy. (4 marks)
(d) Examine THREE factors that influence the supply of a commodity. (6 marks)
(Total: 20 marks)
QUESTION TWO
(a) Distinguish between “price elasticity of demand” and “cross elasticity of demand’’. (4 marks)
(b) The demand function for a commodity is given as: QD = 120 – 3P.
Where QD is quantity demanded and P is price.
Required:
(i) Determine the price elasticity of demand when price is Sh.20. (4 marks)
(ii) Explain THREE types of price elasticity of demand. (3 marks)
(c) Outline FOUR effects of price ceiling on market performance. (4 marks)
(d) Explain FIVE causes of price fluctuations in agricultural markets. (5 marks)
(Total: 20 marks)
QUESTION THREE
(a) Consumer behaviour theory explains how rational consumers allocate limited income among competing wants.
Required:
With reference to the above statement:
(i) Explain FOUR assumptions of indifference curve analysis. (4 marks)
(ii) Using a well labelled diagram, explain consumer equilibrium. (6 marks)
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CA14 & CF14 Page 2
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(b) Analyse THREE causes of cyclical unemployment in an economy. (6 marks)
(c) Evaluate FOUR limitations of fiscal policy in achieving macroeconomic stability. (4 marks)
(Total: 20 marks)
QUESTION FOUR
(a) Explain FOUR stages of production in the short run. (4 marks)
(b) Distinguish between “internal economies of scale” and “external economies of scale”. (4 marks)
(c) With a well labelled diagram, illustrate the short run equilibrium of a perfectly competitive firm. (6 marks)
(d) Describe THREE sources of monopoly power. (6 marks)
(Total: 20 marks)
QUESTION FIVE
(a) Explain THREE methods of measuring national income. (6 marks)
(b) Outline FOUR determinants of economic growth in developing countries. (4 marks)
(c) Explain FOUR roles of the central bank in regulating the banking system in an economy. (4 marks)
(d) Summarise THREE advantages of international trade. (6 marks)
(Total: 20 marks)
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For Solutions/Answers WhatsApp: 0726 640 150
CA14 & CF14 Page 1
Out of 2
CERTIFIED PUBLIC ACCOUNTANTS (CPA)
CERTIFIED INVESTMENT AND FINANCIAL ANALYSTS (CIFA)
FOUNDATION LEVEL
ECONOMICS
TUESDAY: 2 December 2025. Afternoon Paper. Time Allowed: 3 hours.
This paper consists of seven (7) questions. Answer any FIVE questions. ALL questions carry equal marks. Do NOT
write anything on this paper.
QUESTION ONE
(a) (i) Explain FOUR reasons why consumer sovereignty is important in a market economy. (4 marks)
(ii) Analyse FOUR limitations that might hinder the operation of consumer sovereignty in an economy.
(4 marks)
(b) Explain THREE differences between “individual demand” and “market demand” as applied in economics.
(6 marks)
(c) Discuss THREE applications of elasticity of supply in business decision-making process. (6 marks)
(Total: 20 marks)
QUESTION TWO
(a) State SIX effects of subsidies on market equilibrium. (6 marks)
(b) Analyse THREE advantages of cardinal theory of consumer behaviour as an economic concept. (6 marks)
(c) With reference to the theory of a firm, argue FOUR causes of wage differentials between firms. (8 marks)
(Total: 20 marks)
QUESTION THREE
(a) (i) Explain the concept of the optimal size of a firm. (2 marks)
(ii) Analyse FOUR factors that determine the optimal size of a firm. (4 marks)
(b) With reference to market structures, discuss FOUR sufficient conditions for profit maximisation. (8 marks)
(c) Describe the following approaches to measuring national income:
(i) The Income Approach. (2 marks)
(ii) The Output or Product Approach. (2 marks)
(iii) The Expenditure Approach. (2 marks)
(Total: 20 marks)
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