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Econ 110: Introductory Economics March 2009 Question Paper

Econ 110: Introductory Economics March 2009

Course:Bachelor Of Science In Computer Science

Institution: Kabarak University question papers

Exam Year:2009

COURSE CODE: ECON 100
COURSE TITLE: INTRODUCTION TO ECONOMICS
STREAM: Y2S1
DAY: MONDAY
INSTRUCTIONS:
1. Question ONE is compulsory
2. Attempt any other TWO questions.
3. Question ONE carries 30 Marks while the other questions carry 20 Marks each.
4. Concise answers provide competitive advantage to the candidate.

QUESTION ONE COMPULSORY (30 Marks)
a) Differentiate between the following pairs of concepts:
i) Microeconomics and macroeconomics (2mks)
ii) Normative economics and positive economics (2mks)
iii) Price elasticity of demand and cross-price elasticity of demand. (2mks)
iv) Demand function and production function. (2mks)
v) Indifference curve and isoquant. (2mks)
b) i) With the help of a diagram, distinguish between a change in demand and a
change in quantity demanded of a commodity. (4mks)
ii) Explain the factors that cause the change in demand. (5mks)
c) i) discuss any two methods of calculating national income. (6mks)
ii) Why is national income important? (5mks)
QUESTION TWO
a) Distinguish between fixed costs and variable costs. (2mks)
b) The data below show tabulation on the production of a hypothetical product.
Output (Q) Total cost (TC)
Units Kshs.
0 25
1 32
2 38
3 42
4 48
5 58
6 67
7 78
8 98
i) Plot above information in a diagram
ii) Using the above data, determine:
§ Total fixed cost (2mks)
§ Average variable cost when output equals 6 units (3mks)
§ Marginal cost of the third unit of output (3mks)
c) i) Distinguish between economies of scale and diseconomies of scale.
(5mks)
ii) What factors cause economies of scale and diseconomies of scale? (5mks)
QUESTION THREE
a) i) Define perfect competition (1mk)
ii) Explain the main features of a perfectly competitive market (7mks)
b) Show how equilibrium is attained in a perfectly competitive market both in the
short-run and in the long-run. (12mks)
QUESTION FOUR
a) i) Define unemployment (1mk)
ii) Why would unemployment be considered a problem? (6mks)
iii) Are there any benefits of unemployment? Yes/No. Explain (2mks)
b) i) Explain any three (3) types of unemployment in Kenya. (6mks)
ii) Suggest possible solutions to the types of unemployment you have identified
above in b (i) (5mks)
QUESTION FIVE
a) Define money and explain its main functions. (6mks)
b) Define the term monetary policy. (2mks)
c) Discuss the monetary policy instruments used by Central Bank of Kenya. (6mks)
d) What factors limit the effectiveness of monetary policy in developing countries?
(6mks)

Econ 110: Introductory Economics March 2009 Question Paper

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