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Eco 310: Intermidiate Microeconomics Statistics Question Paper

Eco 310: Intermidiate Microeconomics Statistics

Course:Bachelor Of Business Management

Institution: Moi University question papers

Exam Year:2013

MOI UNIVERSITY
OFFICE OF DEPUTY VICE CHENCELLOR, ACADEMIC AFFAIRS,
RESEARCH AND EXTENTION
UNIVERSITY EXAMINATIONS
2012/2013 ACADEMIC YEAR

END OF SEMESTER EXAMINATIONS

FOR THE DEGREE OF
BACHELOR OF BUSINESS MANAGEMENT

EXAM CODE: - BBM 211
COURSE TITLE: - INTERMEDIATE MICROECONOMICS STATISTICS
DATE: - 25TH MARCH, 2013 TIME:-9.00 A.M- 12.00 NOON

INSTRUCTION TO CANDIDATES
? SEE INSIDE.
THIS PAPER CONSISTS OF (3) PRINTED PAGES PLEASE TURN OVER

Attempt all four questions
QUESTION ONE
Suppose a consumer’s utility function is given in the form
U=25ZW
Given that the consumer’s money is Y and the respective prices for Z and W commodities are Pz and pw
i. Derive the demand function for Z and W ( 10 marks )
ii. Suppose Y=kshs 500, Pz=kshs6 and Pw=kshs 10. Determine the consumer’s optimal market basket. ( 10 marks )
iii. Find the marginal utilities of the two commodities ( 5 marks )

QUESTION TWO
Consider the following Cobb-Douglas production function
Q=40K1/2L1/2
a) i) Find the Marginal Product of Labor (MPL) and Marginal Product of Capital (MPK)
ii) what is the Marginal Rate of Technical Substitution Between Labor and Capital ( MRTSlk)

b) i) set Q=80 and find the corresponding isoquant. ( express K as a function of L)
ii) find MRTSlk ( ie dK/dL) for L=1
iii) Does the isoquant obey the law of diminishing MRTS? (15 marks)
c) with the use of indifference curve analysis, show the substitution and income effects for a normal good in case of a price decrease. ( 8 marks )

QUESTION THREE
a) A monopolist faces the following demand curve;
Q=50-1/2P and cost function C=50+40Q
i) Calculate the profit maximizing output of monopolist. ( 6 marks )
ii) What is the profit of the monopolist? ( 3 marks )
b) Explain any four factors which give rise to monopoly power ( 4 marks)
c) Discuss the distinguishing characteristics of perfect competition type of market structure ( 10 marks )

QUESTION FOUR
a) What is an economic model? ( 3 marks )
b) Discuss the steps followed in the construction of micro-economic model ( 12 marks )
c) What determines the relevance of Micro-economic model ( 10 marks )
QUESTION FIVE
Compare and contrast between Oligopoly and Monopoly type of market structures (25 marks)
QUESTION SIX
a) State the assumptions of cardinal utility theory and show its relevance to economic analysis ( 10 marks )
b) Derive the consumers demand curve under both cardinal and ordinal utility theories ( 15 marks )

Eco 310: Intermidiate Microeconomics Statistics Question Paper

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