Get premium membership and access revision papers, questions with answers as well as video lessons.

Microeconomics I Question Paper

Microeconomics I

Course:Bachelor Of Economics

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF ARTS &
BACHELOR OF COMMERCE

EET 100: MICROECONOMICS I

DATE: TUESDAY, 1ST DECEMBER 2009 TIME: 8.00 A.M. - 10.00 A.M.

INSTRUCTIONS: Answer question ONE and any other TWO questions.

QUESTION ONE

Distinguish between the following sets
of
terms.
(30
marks)
i)
Monopsony and monopoly markets
ii)
Own price elasticity of demand and cross price elasticity of demand
iii)
Change in supply and change in quantity supplied
iv)
Engel curve and income consumption curve
v)
Social costs and private costs
vi)
Economies of scale and returns to scale
vii)
Marginal product and average product
viii) isocline and isocost line
ix)
Indifference curve and isoquant
x)
Budget line and compensated budget line

QUESTION TWO

a)
Suppose that a consumer consumes two goods X and Y. Suppose further

that X is a giffen good and that the price of good X increases. With the

aid of well labeled diagram explain how the quantity demanded of good X

will change, clearly isolating the income and substitution effects.
(12 marks)
b)
Outline and briefly explain four characteristics of a monopoly market.
(8 marks)

Page 1 of 2

--------------------------------------------------------------------------------

QUESTION THREE

a)
List and briefly explain the shapes of any four types of isoquants that you know.

(8 marks)
b)
The fact that a firm is in equilibrium does not necessarily mean that it is

making profits. Do you agree with this statement? Illustrate your detailed

answer with the aid of well labeled diagrams.

(12 marks)

QUESTION FOUR

a)
Briefly distinguish between normal, inferior and giffen goods.

(3 marks)
b)
How does the information in (a) above help the producers of each type of
the
goods
in
decision
making.
(7
marks)
c)
Given X = f (K,L) is the production function of firm and C = wL + rK is

its cost constraint. Mathematically derive equilibrium of the firm.
(10 marks)

QUESTION FIVE

a)
Given that the Kenya Ports Authority has the following production function
12
AK

, obtain the firm’s degree of homogeneity and comment on its returns
13
L

to scale.

(10 marks)
b)
Outline and briefly discuss any five sources of monopoly power.
(10 marks)

****************

Page 2 of 2

--------------------------------------------------------------------------------

Microeconomics I Question Paper

More Question Papers

Popular Exams