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Intermediate Microeconomics Question Paper

Intermediate Microeconomics

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2010

COURSE CODE: ECON 210
COURSE TITLE: INTERMEDIATE
MICROECONOMICS
STREAM: Y2S1

INSTRUCTIONS:
i) Answer any THREE questions
(ii) All questions carry equal marks

1. Using appropriate diagrams discuss:
a) The determination of a consumer’s equilibrium faced with a budget
constraint and two commodities. (7 marks)
b) What will happen in (a) above if the budget of the consumer increases?
(5 marks)
c) The determination of a producer’s equilibrium faced with a cost constraint
and two factors of production. (6.3 marks)
d) What will happen in (c) above if the price of one of the factors increases?
(5 marks)

2. Suppose the following information about the utility function and budget of a
household is given:
Utility (U) = 200XYaa
Budget constraint 4,000 = 4X + 2Y
a) Set up the lagragian function (3 marks)
b) What are the conditions for maximization of consumer’s welfare in (a)
above? (3 marks)
c) Solve for the equilibrium quantities of the two commodities and the
maximum utility for the consumer. (14.3 marks)
d) Solve for and interpret the lagragian multiplier. (3 marks)

3. Using graphs
a) Explain the assumptions of a perfectly competitive market. (6 marks)
b) Discuss how a firm in a perfectly competitive market arrives at
equilibrium in the long-run. (10 marks)
c) Explain how a firm can make losses in the short-run. (7.3 marks)

4. Using diagrams
a) Explain the assumptions of a monopolistic market. (6 marks)
b) Discuss how a monopolist arrives at equilibrium in the long-run.
(10 marks)
c) Explain how a monopolist can make normal profits in the short-run.
(7.3 marks)
d) What are the characteristics of a monopolistic competition market?
(6 Marks)
e) Discuss the determination of equilibrium in a monopolictic competition.
(17.3 marks)

Intermediate Microeconomics Question Paper

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