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Managerial Economics Question Paper

Managerial Economics

Course:Master Of Business Administration

Institution: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2010/2011
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF MASTER OF
BUSINESS ADMINISTRATION
BBA 500:MANAGERIAL ECONOMICS
DATE: Monday, 6th December, 2010

TIME: 5.30 p.m. – 7.30 p.m.
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INSTRUCTIONS:
Answer question ONE and any other TWO questions.
QUESTION ONE
a)
Managerial economics is often used to integrate the knowledge of economic
theory with business. Illustrate with examples the role of managerial economics
in shaping business decisions.(6 marks)
b)
Discuss the relationship between scarcity and opportunity cost and show how they
influence the management decision making process.
(6 marks)
c)
Describe the characteristic of a perfectly competitive and monopoly market
structures. How is pricing done in both markets?
(8 marks)
d)
Explain the term economies of scale and show how they relate to the cost of
producing goods and services.
(6 marks)
e)
Highlight the importance of estimating the demand function of goods and services
in a firm.
(4 marks)

QUESTION TWO
a)
Mapato Electric Company is developing a new design of potatoes peeling
machine. The test market data indicate the demand function as follows:-
Q = 25,000 – 1000P

Page 1 of 2
Where Q is the potatoes peeling machine sales
P is the Unit price of each machine
i)
Determine how many potatoes peeling machines that Mapato could sell at
Ksh. 21.0(4 marks)

ii)
At what price would potatoes peeling machine sales be at zero(3 marks)

iii)
Calculate price elasticity of demand at a price elasticity of demand(8 marks)

QUESTION THREE
a)
“Cost Concepts and Analysis have a wide range of application for managerial
uses” With aid of relevant examples discuss the relevance of this statement.
(7 marks)
b)
Describe economies of scale and show how they influence the cost of production
(8 marks)

QUESTION FOUR
a)
With the aid of relevant examples, discuss the following aspects as used in
managerial economics
i)
Transfer pricing
(4 marks)

ii)
Price penetration and price skimming
(4 marks)

iii)
Competition based pricing(4 marks)

iv)
Pricing of public goods
(3 marks)

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Managerial Economics Question Paper

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