Cbm 02: Introduction To Economics Question Paper

Cbm 02: Introduction To Economics

Course:Certificate In Business Management

Institution: Chuka University question papers

Exam Year:2013

UNIVERSITY EXAMINATIONS

EXAMINATION FOR THE AWARD OF
CERTIFICATE IN BUSINESS MANAGEMENT

CBM 02: INTRODUCTION TO ECONOMICS

STREAMS: CERT (BM) TIME: 2 HOURS

DAY/DATE: WEDNESDAY 7/8/2013 8.30 PM – 10.30 AM

INSTRUCTIONS:

Question ONE is Compulsory
Choose Any TWO

1. (a) Define economics and outline the reasons why we study Economics.
[8 Marks]
(b) The table below shows the demand and supply schedule for a product in a given market

Price (Ksh) Demand (kg) Supply (kg)
10 100 20
20 85 36
30 70 53
40 55 70
50 40 87
60 25 103
70 10 120
Required:
Plot the demand and supply curves and determine the equilibrium price and quantity.
[10 Marks]

(c) Identify and explain the attributes of money. [6 Marks]

(d) What is unemployment and explain its causes [6 Marks]

2. (a) With the aid of diagrams and examples explain the following concepts used in
economics;

(i) Production possibly frontier. [4 Marks]
(ii) Substitute goods and complementary goods. [2 Marks]

(iii) Normative and positive economics. [2 Marks]

(b) Given the following demand and supply functions of a commodity

x:Gd=100-2p
Qs=40+p
Compare the equilibrium price and quantity. [4 Marks]

(c) State the reasons why Kenya should participate in international trade. [8 Marks]

3. (a) (i) Define price Elasticity of demand. [2 Marks]

(ii) The demand for a commodity is 20 units when the prevailing market price
is Ksh 80. However when the price rises to Ksh 100 the quantity demanded rises to 30 units. Calculate the Arc and point elasticity of demand. [6 Marks]

(b) Explain an economic system and distinguish between the market economy and
planned economy. [12 Marks]

4. (a) Explain the factors that affect the demand for a supply of commodities in the
market. [10 Marks]

(b) Differentiate between monopoly and perfect competition types of market structures. [8 Marks]

(c) Define inflation. [2 Marks]

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