ECF410 2017 Semester 1 Final Exam
ECF410 2017 Semester 1 Final Exam
Instructions to Candidates:
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SECTION A (COMPULSORY)
QUESTION ONE
American suburbs are expanding to more rural areas at the same time as pig farms are
expanding in size. The smell emanating from the massive amounts of pig manure
adversely affect property values.
Tasks:
[Total: 25 marks]
QUESTION TWO
“Mr. Speaker, in coming up with the proposed revenue measures, I have sought to
increase the level of domestically raised resources while at the same time ensuring that
the burden of taxation is borne equitably. The proposed domestic revenue measures
are expected to raise a total of K42.9 billion, representing 18.4% of GDP”…
“…stakeholders have implored the Government to take measures to ensure that the tax
base is broadened, made fairer and... In this regard, I propose the following measures:”
One of the measures proposed: “increase the Advance Income Tax rate paid at
importation of goods from 6 percent to 15 percent…. Advance Income Tax is not a final
tax. It is refundable at the end of the year upon proof of a person being a compliant
taxpayer…”
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Tasks:
QUESTION THREE
Question Four
a) Explain why the presence of public goods is a likely cause of market failure?
[5 marks]
b) Give five examples of public goods, clearly accounting for the attributes that
render them to be public goods? [5 marks]
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c) Indicate whether each of the following statements is true, false, or uncertain, and
justify your answer.
i) Efficient provision of a public good occurs at the level at which each
member of society places the same value on the last unit. [5 marks]
ii) If a good is non-rival and excludable, it will never be produced by the
private sector. [5 marks]
iii) Large communities tend to consume greater quantities of non-rival goods
than smaller communities. [5 marks]
[Total: 25 marks]
QUESTION FIVE