Econ 100: Introduction To Economics Question Paper

Econ 100: Introduction To Economics

Institution: Kabarak University question papers

Exam Year:2010

INSTRUCTIONS:
Answer question ONE and any other TWO questions

QUESTION 1
(a) Explain the following terms:
(i) The opportunity cost. (1 mark)
(ii) Production function. (1mark)
(iii) Circular flows of income. (1 mark)
(iv) Short – run period in production (1 mark)
(v) Disguised unemployment (1 mark)
(b) Distinguish between the following paired terms:
(i) Change in demand and change in quantity demanded. (2 marks)
(ii) Marginal Rate of Substitution (MRSxy) and Marginal Rate of Technical
Substitution (MRTS Lk) (2 marks)
(iii) Isocost Line and Budget Line. (2 marks)
(iv) Marginal Cost and Marginal Revenue. (2 marks)
(v) Diminishing return and Marginal production of Labour (MPL) (2 marks)
(c) Show that in ordinary utility theory equilibrium is attained when: MUx / PX = MUY/Py
(5 marks)
(d) (i) Raiph waido Emerson once wrote; “Want is a growing giant whom the coat of have
was never laze enough to cover.” How does this statement relate to the definition of
Economics? (2 marks)
(ii) What is meant by the term “Utility” and how does it relate to the rational behavior of
consumers? (2 marks)
(iii) Define the term “Unemployment” and indicate how unemployment is a considered as
a macroeconomic problem. (6 marks)

QUESTION 2
(a) Explain why perfect competition is considered as a theory (2 marks)
(b) Assuming a perfectly competitive market, use appropriate diagrams to show how
equilibrium is attained in the short-run by a :
(i) Profit – making firm (4 marks)
(ii) Loss –making firm (4 marks)
(c) (i) Define market Supply. (2 marks)
(ii) Explain the determination of supply (6 marks)
(iii) Differentiate between change in supply and change in quantity supplied. (2 marks)

QUESTION 3
(a) Define national income. (1mark)
(b) Discuss two approaches to the measurement of national income. (6 marks)
(c) In what ways is national income measurement important? (5 marks)
(d) (i) Distinguish between Average Fixed Costs (AFC) and Average variable Cost (AVC).
(4 marks)
(ii) Use appropriate diagram to define AFC and AVC (4 marks)

QUESTION 4
(a) Define economic of scale. (1mark)
(b) What major advantages of corporations have given rise to their dominance as a form of
business organization? (6 marks)
(c) (i) Why us unemployment varied on a macroeconomic problem? (8marks)
(ii) In what ways would you consider unemployment as beneficial to an economy?
(5 marks)
QUESTION 5
Money is a necessary evil” Discuss. (20 marks)

Econ 100: Introduction To Economics Question Paper

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