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Bbm 115 Question Paper

Bbm 115

Course:Bachelor Of Business Management

Institution: Mount Kenya University question papers

Exam Year:2011

UNIVERSITY EXAMINATION 2010/2011
SCHOOL OF BUSINESS AND PUBLIC MANAGEMENT
DEPARTMENT OF ACCOUNTING AND FINANCE
BACHELOR OF
UNIT CODE: BBM 115 TITLE: INTRODUCTION TO MICROECONOMICS
DATE: APRIL 2011 MAIN TIME: 2HRS
SECTION A :(30MARKS)
1. a. Economics revolves around methods and possibilities of solving the economic problems. In light of this statements;
(i). Define the term economics
(ii). Explain the term ‘choice’ and ‘wants’ as used in asserting economic problem. (6mks)
b. Discuss the two methodologies used in the study of economic. (8mks)
c. State any four features of a free market economy. (4mks)
d. State two exceptional cases where the law of demand does not hold. (2mks)
e. Explain three properties of an isoquants. (6mks)
f. Distinguish between ‘competitive demand’ and ‘composite demand’ (4mks)

SECTION B :(40 MARKS)
2. a. Explain the role of the government in a centrally planned economy. (6mks)
b. Outline the limitations of free market economy. (6mks)
c. Highlight four advantages and four disadvantages of mixed economy. (8mks)
3. a. Define the term “ elasticity of demand” (2mks)
b. Explain the following types of elasticity of demand using relevant diagrams.
(i) Inelastic
(ii) Elastic
(iii) Unitary (10mks)
c. Explain FOUR factors that determine elasticity of supply. (8mks)
4. a. (i) Define the term “ indifference curve” ( 2 mks)
(ii) Explain three properties of an indifference curve. (6mks)
b. Assume you have the function Qdx = 20 – 0.75pxrequired; find point elasticity of demand (6 mks)
c. Explain the sources of monopolistic power (6mks)
5. a. A firm in a perfectly competitive market has the following production cost functions
Fixed costs (FC) = 420
Variable costs (VC) = 60Q+ Q2
Required:
(i) Derive the marginal cost (MC) function and average total cost (ATC) function. (4mks)
(ii) Compute the value of Q, MC, and ATC (10mks)
b. Explain any three types of internal economi

Bbm 115 Question Paper

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