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Eco 310: Intermediate Microeconomics Question Paper

Eco 310: Intermediate 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

THIRD YEAR FIRST SEMESTER EXAMINATION.

FOR THE DEGREE OF BACHELOR OF ARTS (ECONOMICS)

ECO 310:INTERMEDIATE MICRO- ECONOMICS

Instructions: Answer Question ONE and any other THREE

Question One [25 Marks]

(a). Briefly explain the following terms as used in intermediate microeconomics:

i. The budget line (2 Marks)

ii. The law of diminishing marginal utility ( 3 Marks)

iii. The consumer equilibrium. (3 Marks)

iv. Isoquant and isocost. (4 Marks)

(b). Assume that a producer has the possibility of discriminating between domestic and foreign market for a product where the demand functions are respectively given as follows:

Q1=42-0.2P1

Q2=100-0.8P2

Total cost is given by;

TC=4000+20Q

Where Q=Q1+Q2

Calculate profit maximizing level of output and their respective prices in the domestic and foreign markets respectively. (8 Marks)

(c). Explain the limitations of cardinal utility theories. (5 Marks)

Question Two (15 Marks)

(a). Discuss four sources of monopoly power. (8 Marks)

(b). Using indifference curves, distinguish between perfect substitutes and perfect complementary goods. (4 Marks)

(c). State the necessary and sufficient conditions for profit maximization. (3 Marks)

Question Three (15 Marks)

(a). With the aid of a diagram, explain the concept of a firm's least cost factor combination. (5 Marks)

(b). The total cost equation in the production of meat at KMC factory is given as follows;

C=1000+100Q-15Q^2+Q^3

Where C=cost measured in shillings.
Q=quantity measured in kilogrammes.

Required;

i). Compute the total and average costs at the output level of 10 and 11 kilogrammes respectively. (4 Marks)

ii). What is the marginal cost at the 12th kilogramme? (2 Marks)

iii). Explain the shape and relationship between AC, AVC, MC and AFC using relevant diagrams. (4 Marks)

Question Four (15 Marks)

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

(b). Briefly differentiate between oligopoly and monopolistic competition. (4 Marks)

(c). Discuss the main features of a perfect competitive firm. (8 Marks)

Question Five (15 Marks)

(a). Explaining three properties of indifference curves. (6 Marks)

(b). Differentiate between income and substitution effects of price change. (5 Marks)

(c). Justify the reason why marginal cost curve should always cut across the average cost curve at the lowest point. (4 Marks)

Eco 310: Intermediate Microeconomics Question Paper

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