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Econ 110: Introduction To Microeconomics August 2008 Question Paper

Econ 110: Introduction To Microeconomics August 2008

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2008

COURSE CODE: ECON 110
COURSE TITLE: INTRODUCTION TO
MICROECONOMICS
STREAM: Y1S1
INSTRUCTIONS:
1. Answer question ONE and any other Two Questions
2. Question ONE carries 30 marks and all others carry 20 marks each
3. Use appropriate diagrams to illustrate your answers.
QUESTION 1
(a) Define and explain the following economic concepts
(i) Economic problem (2mks)
(ii) Consumer surplus (2mks)
(iii) Isocost line (2mks)
(iv) Marginal utility (2mks)
(v) Monopoly power (2mks)
(b) Using appropriate diagrams explain the difference between the demand curve
faced by the firm under perfect competition and the one under monopoly.
(8mks)
(c) When is the producer and the consumer each said to be rational? (6mks)
(d) Define an isoquant and state its properties (6mks)
QUESTION 2
(a) Define an indifference curve and give the four properties of indifference curves
(5mks)
(b) Explain the consumer’s equilibrium position using indifference curve approach.
(5mks)
(c) Define price elasticity of supply. Explain the economic applications of elasticity
in an economy? (10mks)
QUESTION 3
(a) Distinguish between a movement along a demand curve and a shift of a demand
curve and in each case explain the factors responsible. (8mks)
(b) What factors influence the supply of a commodity? (4mks)
(c) What is equilibrium price? What happens when the market price is :
(i) Above and
(ii) below the equilibrium price? (8mks)
QUESTION 4
(a) What do you understand by discriminating monopoly? Explain the conditions
under which price discrimination is possible. (8mks)
(b) Explain the positive effects of price discrimination (4mks)
(c) What are the sources of monopoly (4mks)
(d) What are the assumptions upon which perfect competition is based?
(4mks)
QUESTION 5
(a) State the law of diminishing returns and give its assumptions. (6mks)
(b) What is the difference between returns to scale and economies of scale?
(4mks)
(c) Give the factors that influence the economies of scale (4mks)
(d) Define the following pairs of economic concepts
(i) Short run and long run (2mks)
(ii) Production function and marginal cost (4mks)

Econ 110: Introduction To Microeconomics August 2008 Question Paper

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