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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:2011

QUESTION ONE – (30 MARKS)
(a) Distinguish between the following terms: (i) Scarcity and choice (4 Marks) (ii) Positive and normative economics (4 Marks) (iii)Microeconomics and macroeconomics (4 Marks) (b) The demand for a commodity is twenty units when the prevailing market price equals eighty shillings per units. However, when the rice per unit rises to one hundred shillings, the quantity demanded rises to thirty units. Calculate both curve and point elasticity of demand. (8 Marks) (c) Define the term cross price elasticity of demand and clearly explain its value for substitutes and complementary commodities. (5 Marks) (d) Explain main reasons for the minimum and maximum price legislation in an economy. (5 Marks)
QUESTION TWO – (20 MARKS)
(a) Define and explain the following terms using appropriate diagram and giving examples where necessary. (i) A Veblen good (4 Marks) (ii) An indifference curve (5 Marks) (iii)Production possibility frontier (6 Marks)
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(b) Define an economic system and outline the merits of the market system in an economy. (5 Marks)
QUESTION THREE – (20 MARKS)
(a) (i) Define the demand for goods and services. (2 Marks) (ii) With any necessary assumptions and illustrations, explain the situation that may lead to the demand curve to slope upwards. (8 Marks) (b) Outline reasons that account for continued survival of small firms despite the existence of large firms producing similar products. (10 Marks)
QUESTION FOUR – (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
QUESTION FIVE – (20 MARKS)
(a) Explain what you understand by the followings: (i) Price elasticity of demand (5 Marks) (ii) Income elasticity of demand (5 Marks) (b) Explain and illustrate graphically the income and substitutions effects for a giffen good. (10 Marks)

Hbc2104:Introduction To Micro Economics Question Paper

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