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Bbm 115 Question Paper

Bbm 115

Course:Bachelor Of Business Management

Institution: Mount Kenya University question papers

Exam Year:2011

UNIVERSITY EXAMINATION 2010/2011
SCHOOL OF BUSINESS AND PUBLIC MANAGEMENT
DEPARTMENT OF ACCOUNTING AND FINANCE
UNIT CODE: BBM 115 UNIT TITLE: INTRODUCTION TO MICROECONOMICS
DATE: AUGUST 2011 MAIN EXAM TIME: 2HRS
ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS
QUESTION 1
a) Write brief notes on the following:
i) Scarcity and choice
ii) Diminishing marginal utility
iii) Price elasticity of demand
iv) Substitution and income effects of price change (each 5mks)
b) Using an illustration, explain the concept of market equilibrium in economics (8mks)
c) Define the term “opportunity cost” (2mks)
QUESTION 2
a) Discuss the barriers to occupational mobility of labour (10mks)
b) Explain the characteristics of free markets economy (10mks)
QUESTION 3
a) What is oligopoly? (4mks)
b) Using a well illustrated diagram, show that a monopolist can make losses in the shortrun even when MC=MR (8mks)
c) Using a well illustrated diagram, explain why prices are , “sticky" downward in an oligopolistic market (8mks)
QUESTION 4
a) Define the term “inferior goods’ (2mks)
b) Explain the law of supply (2mks)
c) Explain a situation where the law of supply is violated (2mks)
d) Explain the concept of consumer sovereignty (4mks)
e) Briefly explain the usefulness of concept of elasticity of demand in decision making process (8mks)
QUESTION 5
a) What is meant by the term “production function” (2mks)
b) Giving appropriate examples, explain the term “fixed factors of production” (3mks)
c) Explain and illustrate the resultant hypothetical total and marginal product curves for an economy with only two factors of production, one of which is fixed (8mks)
d) What is a “production frontier” (3mks)
e) Given a production possibility frontier curve, show the impact of a new more efficient mode of production (4mks)

Bbm 115 Question Paper

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