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Bca/Bps 1202: Introduction To Micro Economics Question Paper

Bca/Bps 1202: Introduction To Micro Economics

Course:Diploma In Purchasing And Supplies

Institution: Dedan Kimathi University Of Technology question papers

Exam Year:2012

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DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY UNIVERSITY EXAMINATION 2010/2011 FIRST YEAR SECOND SEMESTER EXAMINATION FOR THE DIPLOMA IN BUSINESS ADMINISTRTION/ DIPLOMA IN PURCHASING AND SUPPLIES BCA/BPS 1202: INTRODUCTION TO MICRO ECONOMICS 29TH NOVEMBER 2010 TIME: 8.30AM-10.30AM INSTRUCTIONS: Answer question ONE and any other TWO questions QUESTION ONE
a. Write brief notes on each of the following Economic concepts (10 marks)
1. microeconomics and macroeconomics
2. constant returns to scale and increasing returns to scale
3. general equilibrium in exchange and general equilibrium in production
4. Planned economic system
5. welfare economics
6. Factor market
7. Consumer sovereignty
b. Assuming profit maximization demonstrate with a diagram the determination of price and output in the short run for an individual perfectly competitive firm.(6 mark)
c. Identify four major factors of production and indicate the factor prices attached to them( 4 marks)
d. Explain briefly the concept of price discrimination and outline five circumstances under which price discrimination may be effective. (5 marks)
e. Outline five effects of price decontrols to the economy of Kenya (5 marks)
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QUESTION TWO
a. With relevant examples distinguish between positive and normative concepts as used in economic methodology (5marks)
b. Defining a capitalist economic system explain five problems that Kenya would face by adopting a pure capitalist system.(71/2 marks)
c. Discuss five reasons why small firms continue to survive in an economy dominated by large scale firms(71/2 marks)
QUESTION THREE
a. What is elasticity of demand? Explain four factors that may determine elasticity of demand (6 marks)
b. Assume that the quantity demanded of tea changed from 50 packets to 80 packets per week following an increase in price of coffee from sh 10 to sh 15 per packet. Calculate the cross elasticity of tea and advise the firm on its pricing strategy.(4 marks)
c. Define the law of demand and explain four exceptions to this law (6 marks)
QUESTION FOUR
a. With the aid of a diagram illustrate a shift of supply curve to the right and highlight five factors that may lead to the shift (10 marks)
b. Distinguish between economies and diseconomies of scale and and explain five factors that give rise to external economies of scale(10 marks)
QUESTION FIVE
a. Distinguish between cardinal and ordinal utility approach of consumer behavior and explain five characteristics of indifference curves (10 marks)
b. A stable equilibrium is a state in the market that once achieved tends to persist. If there is any disturbance in the market, forces will be generated to restore that state. explain and illustrate graphically how a market attains a stable equilibrium.(10 marks)

Bca/Bps 1202: Introduction To Micro Economics Question Paper

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