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Bcom 101: Principles Of Microeconomics Question Paper

Bcom 101: Principles Of Microeconomics

Course:Bachelor Of Commerce

Institution: Chuka University question papers

Exam Year:2013

UNIVERSITY EXAMINATIONS
CHUKA &EMBU
FIRST YEAR EXAMINATION FOR THE AWARD OF
DEGREE OF BACHELOR OF COMMERCE

BCOM 101: PRINCIPLES OF MICROECONOMICS

STREAMS: BCOM Y1S1 TIME: 2 HOURS

DAY/DATE: WEDNESDAY 7/8/2013 2.30PM – 4.30 PM

INSTRUCTIONS:

Answer Question One and any other TWO Questions
Do NOT Write on the Question Paper
Show your Working Clearly

QUESTION ONE (COMPULSORY)

1. (a) By the use of diagrams, illustrate and explain the resultant change in equilibrium
price and quantity form:

(i) An increase in price of a substitute good
(ii) Increase in tax per unit of production

(b) Briefly explain the main properties of an Isoquant. [10 Marks]

(c) The following is a demand function for a certain commodity (x)
Q_x=50-?3p?_x-2p_y+I
i.e. Q_x=50-3P_x-2p_y+I
where:
Q_(x )= Quantity demanded of good x
p_x= Price of good x
p_y = Price of good y. which is related to good x
I = Income of the consumer.

You are further given that
p_x = 20
p_y= 10
I = 200
Required: compute,

(i) Own price elasticity of demand and interpret your results
(ii) Cross price elasticity of demand and interpret your results
(iii) Income elasticity of demand and interpret your result. [10 Marks]

QUESTION TWO

(a) Government from time to time restrict price through minimum and maximum price policies. Using a well labeled diagram explain the maximum price policy. What are the consequences of such a policy? [10 Marks]

(b) Explain the assumptions of ordinal utility theory. [10 Marks]

QUESTION THREE

(a) “Production will only take place at a range over which marginal product of factors is diminishing but positive.” Prove this with help of a well labeled diagram. [10 Marks]

(b) Discuss the sources of monopoly. [10 Marks]

QUESTION FOUR

(a) Illustrating with diagrams, explain the short run and long run equilibrium conditions for a firm operating in a perfectly competitive market. [12 Marks]

(b) Explain the key factors that influence elasticity of demand. [8 Marks]

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Bcom 101: Principles Of Microeconomics Question Paper

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