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Bbm 116 Question Paper

Bbm 116

Course:Bachelor Of Business Management

Institution: Mount Kenya University question papers

Exam Year:2011

UNIVERSITY EXAMINATION 2011/2012
SCHOOL OF SOCIAL SCIENCES
DEPARTMENT OF ECONOMICS AND DEVELOPMENT STUDIES
UNIT CODE:BBM 116 UNIT TITLE: GENERAL ECONOMICS
DATE: AUGUST 2012 MAIN EXAM TIME: 2HRS
INSTRUCTIONS:
ATTEMPT QUESTION ONE AND ANY OTHER TWO QUESTIONS

QUESTION ONE.
i) If Mrs. BreaderVictorm butter and margarine as a perfect substitute, draw a set of indifference curves that describe her preference for the two commodities. (4 mks)
ii) Write short notes on the following :
a) Opportunity cost
b) Objectives of monetary policies
c) Significance of mobility of factors of production. (5 mks)

iii) Distinguish between supply, demand and equilibrium. (5 mks)

iv) State the necessary conditions for profit maximization by a firm. (2 mks)

v) State 4 limitations of using national income statistics to compare standard of living in different countries. (4 mks)

SECTION B
ANSWER ANY TWO QUESTIONS
QUESTION 2.
a) Suppose in a two commodity market model the supply and demand functions are given as;
i) QDB = 164 -6BP+2PM
QSB = -10 + 30PB

ii) QDM = 184 – 4PM
QSM = -12 + 64PM
Using the functions provided, calculate the equilibrium values of prices and quantities. (8 mks)

b) With the help of a well labeled diagram:
i) Define and explain the law of demand. (4 mks)

ii) Explain four exceptions of this law (law of demand).

3a) Define money and explain the main functions of money. (5 mks)

b) Using a diagram, discuss why people hold money. Explain the Keynesian liquidity preference theory. (9 mks)

c) Explain the role of non Banking financial intermediaries in the Kenyan economy. (6 mks)

Q4. a) Explain the term free trade. Argue the case against free trade. (10 mks)

b) Outline the user of national income statistics in a country. (10 mks)

Q5. a) What are the common features of a perfect competition market structure. (5 mks)

b) Define the term price discrimination as used in economics. (5 mks)

c) Outline the necessary conditions for a firm to successfully pride discriminate. (10 mks)

Bbm 116 Question Paper

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