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Microeconomics(Buss 111) Question Paper

Microeconomics(Buss 111)

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2010

TIME : 2 HOURS
INSTRUCTIONS Answer Question ONE and any Other TWO Questions

Question 1
a) Write short notes on the following
i) Scarcity and choice
ii) Positive and normative economics
iii) Microeconomics and macroeconomics (6marks)
b) Identify and explain the cases of abnormal demand curve (10marks)
c) Explain intervention measures that the government may utilize to minimize the disadvantages of free market economy (10marks)
d) Describe any four sources of monopoly power (4marks)

Question 2
a) Using illustrations explain the change in market equilibrium price and quantity traded of tea following
i) An increase in price of coffee
ii) An increase in the cost of fertilizer which is an input in production of tea (8marks) b) Using examples and well labelled diagrams distinguish between shift and movement along the curve (12marks)

Question 3
a) Distinguish between price elasticity of demand and cros elasticity of demand (6marks)
b) Briefly discuss the factors which affect price elasticity of demand (8marks)
c) Explain the concept of profit maximization (6marks)

Question 4
a) The total cost equation in production of a Z at some hypothetical factory is given as follows C = 500 + 50 Q – 8Q2 + Q3 C = Cost measured ins shillings, Q = Quantity measured in kilogrammes
i) Compute the total and average cost at output of 9 and 10 kilogrammes (6marks)
ii) What is the marginal cost of the 11th kilogramme (4marks)
b) Explain the various benefits of large scale production for a firm (10marks)

Question 5
a) Identify the characteristics of oligopoly firms (4marks)
b) Using illustrations explain the short run equilibrium of a firm under perfect competition (10marks) c) State the assumptions of the utility approach (6marks)

Microeconomics(Buss 111) Question Paper

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