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Lpd 103: Principles Of Economics Question Paper

Lpd 103: Principles Of Economics

Course:Diploma In Purchasing And Supplies

Institution: University Of Nairobi question papers

Exam Year:2011

INSTRUCTIONS:
Answer question ONE and any other Two questions.

QUESTION ONE

a) Differentiate between the following concepts:
i) Economic resources and non-economic resources.
ii) Capital intensive and labour intensive production.
iii) Opportunity cost and absolute cost.
iv) Factor Markets and product markets
v) Ordinal and cardinal approach. (10 marks)

b) Explain the advantages that a free market system has over a planned economy
(6 marks)
c)State the law of demand and explain two exception to the law of demand.
(6 marks)
d)Explain four determinants of demand for a product.
(8 marks)

QUESTION TWO

a) Suppose when the price of a given commodity (x) is Kshs 50/= the quantity demanded is 20 kgs and when the price increases to Kshs 60/= quantity demanded is 10 kgs, when the price of a related commodity (y) increases from Ksh. 45/= to Kshs 55/=, quantity demanded of x increases to 30 kgs. Calculate price point and cross - elasticity of demand and inteprete your coefficients
(12 marks)
b) Explain four practical application of the concept of elasticity.
(8 marks)

QUESTION THREE

a) What are difficulties of using national income statistics for corporations.
(10 marks)
b) Outline six characteristics of good money
(6 marks)
c) Explain the rational for protectionism in international trade
(10 marks)

QUESTION FOUR

a) Mr. Mwangangi wishes to start a manufacturing industry. Advise him on the four factors he should consider when locating a business firm.
(8 marks)
b) Identify and discuss four factors of production and show how they help in production of goods and services in your country.
(12 marks)

QUESTION FIVE

a) State the ideal conditions to perfect competition in a market.
(6 marks)
b) Kenya power supplies company limited is the sole supplier of electricity in Kenya.
Explain.

i) Five condition that gives Kenya and lighting company monopoly power
(5 marks)
ii)Five disadvantages it has for being a sole supplier
(5 marks)
c) Highlight four types of costs that a firm incurs in the process of producing goods.
(4 marks)

Lpd 103: Principles Of Economics Question Paper

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