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Are 102 ,Principles Of Microeconomics Question Paper

Are 102 ,Principles Of Microeconomics

Course:Bachelor Of Science In Agricultural Economics And Resource Management

Institution: Moi University question papers

Exam Year:2013

MOI UNIVERSITY FIRST YEAR SECOND SEMESTER 2013/2014
EXAMINATION FOR BSC.AGRICULTURAL ECONOMICS AND RESOURCE
MANAGEMENT

INTRODUCTION TO MICROECONOMICS
ARE102

INSTRUCTIONS TO CANDIDATES
1.This paper has [5] questions
2.Answer all questions
3.All questions carry equal marks

QUESTION 1

a]Define the following terms [4mks]

1.Microeconomics
11.Oligopoly
111.Utility
1v.monopsony

b] Differentiate between the following;

1]Normative and positive statements using an example in each
case[4mks]
11]Command economic system and pure market system[4mks]

c]Explain the concept of opportunity cost and outline how it relates to
the problem of choice between alternatives[6mks]

QUESTION 2

a]Explain the effect on market price and quantity in the market for
mobile phone handsets of each of the following circumstances;
1]Consumer incomes rise [4mks]

11]Technical improvements reduce production costs [4mks]

111]The price of fixed-line calls falls sharply [4mks]

b]What is the equilibrium market price and quantity for each of the
following pairs of demand and supply curves?

1]Demand:p=80-2q Supply:p=3q [4mks]

11]Demand:p=50-q Supply:p=20+5q [4mks]

QUESTION 3

a]Give the conditions required for a consumer to maximize utility
for;

1]One product [2mks]

11]Two product [2mks]

b]What is an inferior good [1mk]

11]Explain, using indifference curves, how an inferior good could
arise [8mks]

c]A consumer receives a certain amount of income ,Y.Let P1 and P2 be
the prices of food and clothing respectively,

1]If the consumer spends all the income on food and clothing
,determine the equation for the budget line [2mks]

11]Prove that multiplying all prices by the same
constant,thither,while holding income constant has exactly the same
effect on the budget line as
multiplying income by 1/thither while holding prices constant
[5mks]

QUESTION 4

a]Differentiate between the following ;

1]Laws of demand and supply [4mks]

11]Implicit and explicit costs [4mks]

111]Marginal revenue and marginal cost [4mks]

b]Explain the concept of diminishing marginal rate of substitution
[8mks]

QUESTION 5

a] Explain the concept of equilibrium of an industry [5mks]

b]Explain with an illustration how price is determined under monopoly
[10mks]

c]What is price discrimination?Is it justified? Give the conditions
necessary for successful price discrimination [5mks]

Are 102 ,Principles Of Microeconomics Question Paper

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