Dfe 101 General Economics Question Paper
Dfe 101 General Economics
Course:Diploma In Business Management
Institution: Kca University question papers
Exam Year:2014
UNIVERSITY EXAMINATIONS: 2013/2014
STAGE III ORDINARY EXAMINATION FOR THE DIPLOMA IN
BUSINESS MANAGEMENT
DFE 101 GENERAL ECONOMICS
DATE: AUGUST 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
a) Briefly explain why demand curve is downward sloping (2 Marks)
b) Define the law of demand and draw a normal demand curve (3 Marks)
c) Explain a situation where the law of demand is violated (3 Marks)
d) Distinguish between a change in quantities supplied and the change in supply (use
diagrams to illustrate your answer)
e)
(4 Marks)
Consider the following demand and supply function of commodity X.
QD= 100-2p
QS = 40 + 4p
(i)
Compute the market equilibrium.
(2 Marks)
Suppose the price (p) of commodity X is reduced to 5
(ii)
Is demand for commodity X elastic or inelastic? (show your workings and
explain your answer)
(6 Marks)
QUESTION TWO: (20 MARKS)
Government intervention in the labour market is considered to be one of the factors that can lead
to disequilibrium in this market. However the government may impose regulations on the
Minimum wage rates so as to protect the members of the public from exploitation by firms.
1
Required:
a)
Using well labeled diagrams, show how the government policy on minimum wage rates
may cause disequilibrium in the labour market
b)
(8 Marks)
The following is some data about costs for a single firm.
Output
Total Variable Cost
Total Cost
0 0 20
1 15 35
2 25 45
3 34 54
4 42 62
5 51 71
6 61 81
7 76 96
8 106 126
9 156 176
(i) Identify the level of fixed costs for this firm. (2 Marks)
(ii) Derive average cost and marginal cost schedule from the data given. (5 Marks)
(iii) If this firm is able to sell all of its output at a fixed price of £15 per unit, how
many units should it sell to maximize profits and what will its level of profits be?
(5 Marks)
QUESTION THREE: (20 MARKS)
a)
Differentiate between the following terms as used in general economics
(i) Visible and Invisible trade
(ii) Absolute and comparative advantage
b)
(4 Marks)
The following table describes the production of agricultural and manufactured goods in
two countries :
Country Agricultural goods Manufacturing goods
A 160 180
B 240 200
TOTAL 400 380
2
(i)
Which country has a comparative advantages in the production of agricultural
goods.
(ii)
(2 Marks)
Which country has a comparative advantages in the production of manufacture
goods.
(iii)
(2 Marks)
Which countries, if any, has an absolute advantages in production of agricultural
goods and manufactured goods.
c)
(2 Marks)
Discuss any three forms of restriction or protectionism as used in international trade
(6 Marks)
d)
Asses the contribution that international trade has made to our economy.
(4 Marks)
QUESTION FOUR: (20 MARKS)
A hypothetical open economy has national income accounting figure that reflect:
Export = 50
Import = 30
Depreciation = 10
Wages = 20
Interest = 10
Rent = 30
Dividend =5
Direct taxes = 40
Indirect taxes = 60
Private consumption = 60
Private investment = 25
Government Expenditure = 90.
Required:
a) Define the term open economy (2 Marks)
b) Compute the GNP of this economy using: (18 Marks)
(i) Income method
(ii) Expenditure method
(iii) Explain why GNP of Income Method = GNP of Expenditure Method
3
QUESTION FIVE: (20 MARKS)
a) Define the term unemployment (2 Marks)
b) State and explain any four types of unemployment. (8 Marks)
c) Outline any five effects of inflation to an economy (5 Marks)
d) Suggest any five ways in which inflation in an economy could be arrested in any
economy.
(5 Marks)
4
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