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Hps2245:Intermediate Microeconomics Question Paper

Hps2245:Intermediate Microeconomics

Course:Bachelor Of Commerce

Institution: Meru University Of Science And Technology question papers

Exam Year:2011

QUESTION ONE (30 MARKS)
a) Explain the following terms: a. Diminishing Marginal returns. (4 marks) b. Diminishing Return to scale. (4 marks) b) Why is diminishing Marginal returns considered a short run concept while diminishing returns to scale as long run concept. (6 marks) c) Explain the concept of elasticity of substitution. (4 marks) d) Suppose we have a production function Q = 5L0.5 K0.5 . Determine a. The marginal product of labour (L). (3 marks) b. The marginal product of Capital (K). (3 marks) c. The marginal rate of technical substitution of labour for capital (MRTSl,k) (3 marks) d. The elasticity of substitution of substitution of labour for capital (3 marks)
QUESTION TWO (20 MARKS)
a) Explain the term, Price discrimination. (7 marks) b) Discuss the three types of price discrimination (3 marks) c) Under what conditions will a monopolist be willing and able to engage in price discriminations (4 marks)
2
d) Given the demand and supply functions in a particular market as Qd = 80 6p
Qs = 30 + 4p
Required:
i) Equilibrium quantity. (3 marks) ii) Equilibrium price. (3 marks)
QUESTION THREE (20 MARKS)
a) Explain the following terms: (10 marks) a. Pareto optimality b. Externality c. Natural monopoly b) Discuss in details the difference between short run productions function and the long run production functions. (10 marks)
QUESTION FOUR (20 MARKS) a) A production firm faces the production function Q =8L-24L2 4L3 Required: a. Find the maximum points of MP and AP curves. (6 marks) b. Show the MP crosses AP at its maximum point. (4 marks) b) Explain how production function and describe the technological constraints facing the firm. (10 marks)
QUESTION FIVE(20 MARKS)
a) Explain how the following terms are used in economics: a. Scarcity (4 marks) b. Production possibility curve (4 marks) c. Opportunity cost (4 marks) b) Suppose a firm has a total cost given as C = 200 + 10Q + 2Q2 Required: Find the function for AFC + ATC (8 marks)

Hps2245:Intermediate Microeconomics Question Paper

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