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Eco 110: Introduction To Microeconomics Question Paper

Eco 110: Introduction To Microeconomics

Course:Bachelor Of Arts In Economics

Institution: University Of Kabianga question papers

Exam Year:2016

SCHOOL OF BUSINESS AND ECONOMICS.

Department of Accounting, Finance and Economics.

2016/2017 Academic Year.

FIRST YEAR FIRST SEMESTER EXAMINATION.

FOR THE DEGREE OF BACHELOR OF ARTS (ECONOMICS)

ECO 110: INTRODUCTION TO MICROECONOMICS.

Instructions: Answer Question ONE and any other THREE.

Question One [25 Marks]

a). Write short notes on the following terms as used in economics.

i. Consumer sovereignty (3 Marks)

ii. Scarcity and choice. (4 Marks)

iii. Opportunity cost. (3 Marks)

iv. The production possibility frontier. (3 Marks)

v. The law of diminishing marginal returns. (3 Marks)

b). Distinguish between positive and normative economics and discuss their significance in economic policy. (6 Marks)

c). What are the limitations of cardinal approach as a measure of utility. (3 Marks)

Question Two (15 Marks)

a). The demand and supply curves for television sets in the supermarket are given by the following functions.

Demand 0.04=400-Q

Supply 0.06=Q+500

Where p and q are prices in shillings and quantity in units respectively.

Calculate the equilibrium price and quantity of television sets. (6 Marks)

b). Discuss the applications of indifference curve analysis. (6 Marks)

c). Distinguish between the short run and long run production function. (3 Marks)

Question Three (15 Marks)

a). Suppose the total cost function of a firm operating in the short run is given by.

TC=25+4Q-2Q^2+3Q^3

Calculate

i. The ATC function at Q=10. (2 Marks)

ii. The marginal cost function at Q=10. (3 Marks)

iii. The AVC. (2 Marks)

b). Discuss four types of economic costs incurred by a firm in production. (8 Marks)

Question Four (15 Marks)

a). What are the characteristics of perfect competition in an economy. (5 Marks)

b). Discuss the merits and demerits of specialization by a firm. (10 Marks)

Question Five (15 Marks)

a). Define the term price discrimination as used in economics. (3 Marks)

b). Distinguish between producer and consumer goods. (4 Marks)

c). State the ideal conditions of a monopoly in the market. (3 Marks)

d). Outline the conditions that should exist in order for a monopolist to successfully exercise price discrimination. (5 Marks)

Eco 110: Introduction To Microeconomics Question Paper

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