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:2012
QUESTION ONE
a) Explain the law of demand and the various exceptions to the law. ( 6 marks) b) Distinguish between movement along a demand curve and shift of demand curve. ( 4 Marks) c) Differentiate the following pairs of concepts as applied in economics. (i) Normative and positive economics (ii) Indifference curve and Isoquant (iii) Macro economics and Micro economics (iv) Marginal Rate of substitution and Marginal rate of technical substitution.
( 10 Marks)
d) Consider the following equations Q-10 = ?2P, ?P + Q = 24 (i) Identify with reasons which of the above equations represent demand and supply functions. ( 2 Marks) (ii) Calculate the equilibrium price and quantities and interpret your results. ( 8 Marks)
2
QUESTION TWO
a) Distinguish between price consumption curve and income consumption curve (4 Marks)
b) (i) Show the relationship between AVC, ATC and MC curves on a graph. ( 4 Marks)
(iii) The cost information for a certain firm are given as: AVC = 30 AFC = 50 Calculate TC when Q= 5 ( 4 Marks)
c) Discuss the factors that determine the price elasticity of demand. ( 8 Marks)
QUESTION THREE (20 MARKS)
a) Define the price elasticity of supply and outline the factors that determine. ( 8 Marks) b) Explain the applications of the theory elasticity in economics. ( 5 Marks) c) The following table shows a schedule of individual demand. Px Py Qx 4 2 10 6 5 8 8 8 6 10 11 4 (i) Calculate Cross Price elasticity demand when the price of Good V changes from 2 to 8 (5 Marks) (ii) Using the result in (i) comment on the relationship between good X and Y. (2 Marks)
QUESTION FOUR ( 20 MARKS)
a) Describe the short run equilibrium for a firm in a monopolistic competition. ( 5 Marks) b) Distinguish between a Duopoly and Oligopoly. ( 5 Marks) c) With the aid of a diagram, illustrate a situation of a loss in a perfection competitive market. ( 5 Marks) d) Explain the factors that give rise to monopoly power in the market. ( 5 Marks)
QUESTION FIVE ( 20 MARKS)
Illustrate and explain the following:-
a) Consumer equilibrium under the Cardinalist approach. ( 10 marks) b) Consumer equilibrium under the Ordinalist approach. ( 10 Marks)
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