Hcob2505:Production Economics Question Paper

Hcob2505:Production Economics

Course:Bachelor Of Commerce

Institution: Meru University Of Science And Technology question papers

Exam Year:2012

QUESTION ONE (30 MARKS)
a) What is meant by factor mobility in production? ( 2 Marks) b) Briefly describe the two major types of factor mobility? ( 4 Marks) c) Using a well labeled diagram, explain the Law of diminishing returns. ( 10 Marks) d) Based on the theory of comparative advantages, give the products that each of the countries below should specialize in?
COUNTRY Cost of producing one unit PRODUCT -A PRODUCT -B COUNTRY X 12 14 COUNTRY Y 20 16 ( 5 Marks)
e) Briefly explain the properties of an isoquant in production theory. ( 5 Marks)
QUESTION TWO (20 MARKS)
a) With the aid of a well labelled diagrams distinguish between short run and long run production? ( 10 Marks) b) Describe the four main factors of production. ( 10 marks)
2
QUESTION THREE (20 MARKS)
a) What factors may hinder occupational mobility? ( 4 Marks) b) Advice the ministry of labour on what policies to adopt in the enhancement of occupational and geographical mobility? ( 10 Marks) c) What are some of the advantages of specialization? ( 6 Marks)
QUESTION FOUR (20 MARKS) a) Given the following information about Utawala industries limited production schedule, determine graphically the: - Total product (TP) - Average product (AP) - Marginal product (MP)
UNITS OF LABOUR
0 1 2 3 4 5 6 7 8
OUTPUT PER DAY
0.0 1.0 3.0 7.0 9.0- 10.0 10.7 11.0 10.5
( 10 Marks)
b) A firms total cost function is given as: TC = 50+16Q -8P2 + 12Q3
Derive:
i) The MC function
ii) AC function
ii) Calculate MC and AC when Q=10 units ( 10 Marks)
QUESTION FIVE (20 MARKS)
a) What is meant by economies of scale in production? ( 2 marks) b) Discuss the various types of economic of scale? ( 8 Marks) c) Distinguish between fixed and variable costs in the short run. ( 5 Marks) d) Illustrate diagrammatically how equilibrium can be achieved in the production sector using the isoquant and iscost curves? ( 5 Marks)

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