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Introduction To Economics(Dpba 019) Question Paper

Introduction To Economics(Dpba 019)

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2013

TIME : 2 HOURS
INSTRUCTIONS Answer Question ONE and any Other TWO Questions
Question 1
a) Define the term economics? (2marks)
b) Write short notes on the following economic terms
i) Scarcity (2marks)
ii) Opportunity costs (2marks)
iii) The production possibility frontier (4marks)
c) When prices of both substitutes and complements of a commodity, say X, rise, what happens to the demand of commodity X (6marks)
d) Under what condition does a monopoly power exist in the market (8marks)
e) Briefly state and explain the determinant of the supply of a commodity (6marks)

Question 2
a) Distinguish between demand and supply of a commodity (4marks)
b) How does the change of the following determinants of demand affect the demand for a commodity? (6marks)
i) Price of the commodity
ii) Increase in consumer income
iii) The consumer’s expectation about future prices
c) Distinguish between price and income elasticity (4marks)
d) We assume the price of commodity X is kshs 12 per unit and demand for commodity Y at its own price is 15 units. We further assume that price of X rises from kshs 12 to kshs 15 per unit and as result of this, demand of Y increases from 15 to 20 units. Calculate cross elasticity of demand. Are the two commodities substitutes or complements? (6marks)

Question 3
a) Both marginal utility approach and the indifference curve approach yield the same equilibrium position for a rational consumer. Compare these explanations of equilibrium and discuss the relative advantage of the two approaches. (12marks)
b) What is an indifference curve? What are its properties or characteristics? (8marks)

Question 4
a) List the various factors of production (2marks)

b) What is meant by mobility of labour? Discuss the various mobility of labour(10marks)
c) Explain the law of diminishing marginal rate of substitution with a well labeled diagram and schedule (8marks)

Question 5
a) Explain briefly the necessary conditions for a perfectly competitive market (6marks)
b) Define the term price discrimination as used in economics (4marks)
c) Outline the necessary conditions for a firm to successfully price discriminate (10marks)

Introduction To Economics(Dpba 019) Question Paper

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