a)          State the economic circumstances under which a perfectly competitive market may tribe.

b)     In what ways does a perfect market differ from a monopoly, oligopoly and monopolistic competition?

Question Two

a)          Distinguish between supply, demand and equilibrium price.

b)     Explain what is meant by elasticity of supply and state the factors that determine the supply of a good in the market.

c)          The table below shows the demand and supply schedules for a product:

PRICE (KShs. per kg)                    DEMAND (kg)                        SUPPLY (kg)

                        10                                                         100                                                       20

                        20                                                         85                                                        36

                        30                                                         70                                                        53

                        40                                                         55                                                        70

                        50                                                         40                                                        87

                        60                                                         25                                                        103

                        70                                                         10                                                        120

            Draw the demand and supply curves and draw the equilibrium price and quantity.