Hbc2104:Introduction To Micro Economics Question Paper
Hbc2104:Introduction To Micro Economics
Course:Bachelor Of Commerce
Institution: Meru University Of Science And Technology question papers
Exam Year:2014
QUESTION ONE (30MARKS)
(a) Distinguish between the following concepts as used in economics. (i) Marginal rate of substitution and marginal rate of technical substitution. (4 Marks) (ii) Price consumption curve and income consumption curve. (4 Marks) (iii) Expansion path and Engel curve. (4 Marks) (iv) Production possibility frontier and isoquant. (4 Marks) (b) The supply of a commodity is thirty units when the prevailing market price is 60 Kes per unit. When the price increase to 80 Kes per unit the quantity supplied increases to 40 units. Calculate the point elasticity of supply. (6 Marks) (c) Explains the reasons for price legislation in the economy. (4 Marks) (d) Explain the concept of externality as applied in microeconomics. (4 Marks)
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QUESTON TWO (20 MARKS)
(a) Explain the factors that influence the price elasticity of demand. (6 Marks) (b) With the aid of a diagram explain the short-run and long-run equilibrium of the firm under perfect competition. (10 Marks) (c) Explain the least cost combination of inputs. (4 Marks)
QUESTION THREE (20 MARKS)
(a) Discuss the stages of the law of variable proportions. (10 Marks) (b) Distinguish between ordinal utility and cardinal utility measure. (4 Marks) (c) Assume the firm has the following total revenue and total cost functions: ???? = 320?? - 2??2 ???? = 1800 - 50?? + 3??2
Determine the level of output the firm will maximize profits. (6 Marks)
QUESTION FOUR (20 MARKS)
(a) Consider the following equations 10?? - 200 = 1 4 ?? 1 4 ?? + 1 8 ?? = 240 (i) Identify with reasons which of the above equations represents demand and supply functions. (4 Marks) (ii) Calculate the equilibrium price and quantities and interpret your results. (6 Marks) (b) Distinguish between a centrally planned economy and a free enterprise economic system. (10 Marks)
QUESTION FIVE (20 MARKS)
(a) A biscuit producing company has the following variable cost function. ?????? = 200?? + 9??2 + 0.25??3 If the company fixed costs are 150Ksh. Calculate: (i) Total cost function. (2 Marks) (ii) Marginal cost function (2 Marks) (iii) Average variable cost function (2 Marks) (iv) Average total cost function (2 Marks) (v) At what output level average variable cost and marginal cost will be at minimum. (4 Marks) (b) Describe the short run equilibrium for a firm in a monopolistic competition. (8 Marks)
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