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Aec 100:Elements Of Microeconomics Question Paper

Aec 100:Elements Of Microeconomics

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2009

INSTRUCTIONS:ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS.

QUESTION ONE
Distinguish between the following sets of terms (30marks)
i)Oligopoly and monopoly
ii)Own price elasticity and cross price elasticity
iii)Change in demand and change in quantity demanded
iv)Engels curve and demand curve
v)Social costs and private costs
vi)Economies of scale and returns to scale
vii)Income consumption curve and price consumption curve
viii)Indifference curve and isoquant
ix)Budget line and isocost line

QUESTION TWO
(a)Suppose that a consumer consumes two goods X and Y.Suppose further that X is a normal good and that the price of X increases.With the aid of a well labeled diagram,explain how the quantity demanded of X will change.(10marks)

(b)Outline and briefly explain 5 characteristics of a perfectly competitive market.(10marks)

QUESTION THREE
(a)List any four types of markets that you know (4marks)
(b)With the aid of a well labeled diagram,discuss the three stages of production.Clearly show the relationship between total product,marginal product,and average product. (10marks)
(c)Briefly distinguish between microeconomics and macroeconomics (6marks)

QUESTION FOUR
(a)List any four types of isoquants that you know (4marks)
(b)Briefly distinguish between normal,inferior and giffen goods (6marks)
(c)Given X=f(K,L) as the production function of a firm and C=wL+rK is the cost constraints.Mathematically derive the equilibrium of the firm (10marks)

QUESTION FIVE
(a)Compare and contrast the cardinalist and ordinalist theories of consumer behavior(10marks)
(b)With the aid of a well labeled diagram,illustrate the fact that being in equilibrium does not necessarily mean that the firm is making profits.Show cases where a firm makes windfall profits,normal profits,loss but can continue in operations,and loss that leads to shutdown of operations (10makrs)

Aec 100:Elements Of Microeconomics Question Paper

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