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Micro past papers - questions

Introduction to Microeconomics (Mulungushi University)

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MULUNGUSHI UNIVERSITY
SCHOOL SOCIAL SCIENCES
DEPARTMENT ECONOMICS
COURSE INTRODUCTION TO MICROECONOMICS (SSE 121)
TEST ONE
DATE 5TH OCTOBER, 2018
DURATION 1Hr
INSTRUCTIONS ANSWER ALL QUESTIONS

1. Define the following terms: (2 marks each = 4 marks)

(a) Scarcity

(b) Opportunity Cost

2. The following questions are in relation to the production Possibility Frontier/Curve.

(a) What is a PPF/PPC. (2 marks).

(b) Draw a PPF/PPC and indicate the following points for a farmer producing maize and
wheat: point “A” the farm is flooded; point “B” a combination of maize and wheat
are produced; point “C” unattainable position; and point “D” only wheat is produced
(put wheat on Y-axis) (1 mark each = 4 marks)

(c) Why does the PPF/PPC have the shape it has? (2 marks)

3. Explain how the following events affect the equilibrium price and quantity of bread: (3
marks for each graph and 2 marks explanation = 5 marks. Subtotal 10 marks)

(a) a new technology improves wheat production.

(b) a cheaper substitute is offloaded on the market

4. Interpret the following results: (2 marks each = 4 marks)

(a) Price Elasticity of Demand (PED) = 3.5

(b) Income Elasticity of Demand (YED) = -2

5. A consumer spends K200 monthly on Product A when its price is K2 and continues to
spend K200 monthly when its price increases to K2.50. Calculate the consumer’s price
elasticity of demand. Show all your workings and explain your answer. (4 marks)

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End of Test!
Wishing you the very best of luck!
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MULUNGUSHI UNIVERSITY
SCHOOL SOCIAL SCIENCES
DEPARTMENT ECONOMICS
COURSE INTRODUCTION TO
MICROECONOMICS
COURSE CODE SSE 121
DATE SEPTEMBER, 2016
DURATION 3 HOURS
MARKS 60/100 (DEF./SUPP.)
READ THE INSTRUCTIONS AND QUESTIONS VERY CAREFULLY

ODL DEFERRED/SUPPLEMENTALY EXAMINATIONS

INSTRUCTIONS TO STUDENTS
1. Read these instructions carefully.

2. This paper contains SIX (6) questions.

3. Answer any FOUR (5) QUESTIONS . All the questions carry equal marks

QUESTION TWO
A. What is an equilibrium price ( 2marks)

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B. Given below is a combined supply and demand schedule :

PRICE DEMAN SUPPLY

PER KG D IN KGS IN KGS
1,200 400 100
1,400 300 150
1,600 200 200
1,800 150 250
2,000 100 300

(1) On one diagram sketch the demand and supply curve. Use a graph paper. ( 5 marks)

(2) What is the equilibrium price and quantity ( 2 marks)

(3) Give any three factors that affect supply. ( 3 marks)

(4) Give any four factors that affect demand (4 marks)

(5) Give any four exceptions to the law of demand( 4 marks)

QUESTION THREE
A. Draw a production possibilities curve for a farmer producing maize and wheat and show
the following points:

a. Point A where all resources are allocated to maize production only.

b. Point B where the farmer is producing both products

c. Point C : half of the farm is flooded by water

d. Point D. only wheat is produced.

e. Point E : un attainable position position

2 marks each = 10 marks.

B. Mention any four factors which can cause the PPF to shift inwards ( 8 marks).

C. Define the term opportunity cost ( 2 marks )

QUESTION FOUR
A. With the help of graphs explain the relationship between output and the average fixed cost and the average
variable costs ( 8 marks)

B. Complete the following table:-

OUTPUT TFC TVC AFC AVC

1 50 30

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2 50 50
3 50 60
4 50 65
5 50 80

ONE MARK EACH = 10 MARKS

C. Define the term marginal cost. (2 marks)

QUESTION FIVE
A. Make a distinction between the short run and long run period as applied in economics. (6 marks)

B. In the production function : QX = f( K,LN,E) t what do the letters K.L,N and E stand for . (4 marks )

C. With the help of a diagram explain the relationship between marginal utility and total
utility.(6 marks)

D. State the law of diminishing marginal utility and give any two reasons why this law is
important (4 marks)

QUESTION SIX
With the help of diagrams compare the equilibrium position of a company under perfect
competition and monopoly ( 20 marks)
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EXAMINATION UESTIONS
QUESTION ONE
A. Briefly explain difference between cardinal utility theory and ordinal utility theory. (5
marks)

B. With the help of a diagram explain the relationship between total utility and marginal
utility.(5 marks)

C. Suppose the consumer’s income is K100 and the unit costs of oranges and apples are
K5.0 and K10.0 respectively. Prepare a budget line schedule and plot the budget line.
( put oranges in the Y-axis)

QUESTION TWO
A. State the law of demand and mention any 3 exceptions to this law. (4 marks)

B. Briefly explain the difference between normative and positive economics. (5 marks)

C. Briefly discuss the concepts of economic efficiency and rational thinking. ( 6 marks)

QUESTION THREE
A. Discuss the problems of scarcity, choice and opportunity cost( 10 marks).

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B. Define the term “production possibilities curve” and draw a diagram showing the
following

Points for a farmer producing maize and rice. ( put maize on the Y-axis)
i. Point X where the farmer is producing maize only

ii. Point Y un reachable level of production

iii. Point L where the farmer is producing both crops

iv. Point K where the farm is underutilized.

v. Point M where only rice is produced

QUESTION FOUR
A. Giving examples, explain the difference between micro and macro economics (5 marks)

B. Define the following terms: (2 marks each = 10 marks))

i. Oligopoly.

ii. Marginal rate of substitution

iii. Cross elasticity of demand

iv. Economies of scale

v. Product differentiation

Question five
A. Complete the following table. ( ½ mark each = 10 marks)

Labour Output AP MP
1 2
2 10
3 21
4 36
5 55
6 63
7 70
8 72
9 72
10 68

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B. Mention any 5 factors that affect demand ( 5 marks)

QUESTION SIX
A. Mention any 5 features of perfect competition. ( 5 marks)

B. Briefly explain how prices are determined under perfect competition. ( 5 marks)

C. On one diagram show the relationships between output, MC and average costs. ( 5 marks)

QUESTION SEVEN
With the help of diagrams explain what would happen to equilibrium price and quantity
of fresh milk in the town of Kabwe when the following events take place ( 3 marks each)
i. The population of Kabwe increases.

ii. The population of diary cattle increases by 30 %.

iii. Cattle disease kills 40% of diary cattle.

iv. A cheap substitute ( powdered milk) floods the market.

v. Farmers are trained in diary farming

QUESTION EIGHT
A. From the indifference curve schedule given below draw the indifference curve: ( 3 marks)

COMBINATIO GOOD Y GOOD

N X
A 21 1
B 15 2
C 10 3
D 6 4
E 3 5
F 1 6
B. Mention any four (4) properties of indifference curves ( 4 marks)

C. Complete the table below. ( 5 marks)

PED TYPE OF
COEFFICIENT ELASTICITY
OD DEMAND
0.0001
1.0001
0.0000
∞
1.000

D. Mention any three assumptions of indifference curves analysis. (3 marks)

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Question nine
State whether the following statements are true or false:
i. Along the indifference curve total utility changes from one point to another depending
on the quantities of the two products consumed.

ii. Inverse relationship means price and demand move in the same direction

iii. Economic efficiency means satisfying our needs as much as possible from our limited
resources.

iv. Rational thinking means to consider benefits only in decision making

v. Opportunity cost means the value the value of the second best alternative foregone.

vi. A company under monopoly is a price taker

vii. In the long run a company under monopolistic competition enjoys abnormal profits.

viii. A market is a place where goods are sold.

ix. Change in a factor that affects demand other than price will cause a movement along the
demand curve.

x. If demand is elastic to increase sales volume a firm should increase the price of the
product.

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MULUNGUSHI UNIVERSITY

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SCHOOL OF BUSINESS STUDIES (SBS)

MICRO-ECONOMICS II (BCM 122)
SUPPLEMENTARY/DEFFERED EXAM (FULL TIME)
(REPEAT)

August, 2012

Time Allowed: 3 Hours

Instructions: Answer a total of FOUR questions-Questions 1 and 2 are compulsory.

Question One:
a) Discus the objectives of a business firm and the major considerations that a business firm
makes in its activities. [3 Marks]

b) Define market structure. What are the bases for classifying market structure?
[3 Marks]

c) With the aid of mathematical illustrations explain the two marginal conditions for profit
maximization. [4 Marks]

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d) Briefly explain the cournot duopoly model [5 Marks]

e) Draw the cost and revenue curves for a typical competitive firm in the short run and in
the long run. For a given price level illustrate and explain how the firm chooses the level
of output that maximizes profit both in the short run and long run?

(10 Marks)

Question Three

a) What is an externality? Give two examples of negative externalities and two examples of
positive externalities [5 marks]

b) What is the condition for Pareto optimality? How you would explain the concept in
exchange of commodities among consumers? [10 marks]

a) [12 Marks]

Question Five:
Using diagrams where necessary compare and contrast a Monopoly market Structure and a
Perfectly Competitive market Structure. [15 Marks]

Question Six:
Suppose a firm is operating in monopolistically competitive market structure.
(a) Mention at least three characteristics of this market structure. [3 marks]

(b) What type of demand curve would the firm experience? Why? [2 marks]

(c) Draw the cost and revenue curves for a typical monopolistically competitive firm in
the short run and in the long run for a given price level, illustrate and explain how
the firm chooses the levels of output that maximizes profit. [10 marks]

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End of Exam
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MULUNGUSHI UNIVERSITY
SCHOOL OF BUSINESS STUDIES (SBS)
MICRO-ECONOMICS II (BCM 122)
FINAL EXAM

June, 2012

Time Allowed: 3 Hours

Instructions: Answer a total of FIVE questions-Questions 1 and 2 are compulsory.

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Question One:
a) Write short notes to explain the following:
i) Market structure (3Marks)
ii) Marginal Cost
(3Marks)
iii) Reaction Curve (3Marks)

iv) Third Degree Price discrimination

(3Marks)

v) Franchise (3Marks)

b) Draw the cost and revenue curves for a typical monopoly firm in the short run. For a given
price level explain how the firm chooses the level of output that maximizes profit?
(5Marks)

Question Two:
a) Suppose that the total cost (TC) and total revenue (TR) of a given production activity is as
shown in the table below.

Quantity 0 1 2 3 4 5 6 7
TC K,8,00 K9,000 K10,00 K11,000 K13,00 K19,00 K27,00 K37,00
0 0 0 0 0 0
TR 0 K8,000 K16,00 K24,00 K32,00 K40,00 K48,00 K56,00
0 0 0 0 0 0

i) Calculate marginal revenue and marginal cost for each quantity. (10 Marks)

ii) What is the profit maximization level of output? (2 Marks)

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iii) Is this firm operating in perfectly competitive market or another market structure? Why?
(3 Marks)

b) Given the total cost function ,

i) Calculate the average cost (AC). (2

Marks)

ii) Calculate the marginal cost (MC) function. (3 Marks)

Question Three:

a) Differentiate between Partial Equilibrium Analysis and General Equilibrium Analysis

(3 Marks)

b) Explain the concept and the causes of Market Failure? (7 Marks)

Question Four:

Suppose that a two firm duopoly dominates the market for spreadsheet application software, and
that the firms face a linear market demand curve , where +. The firm’s cost functions are and.

i) Derive the Cournot reaction curves for firms 1 and 2. (6 Marks)

ii) Based on your answers in (i) calculate firm 1’s output level, firm 2’s output level and
market output and price levels. (4 Marks)

Question Five:

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A discriminatory movie monopolist sells the service to college students and lecturers. The
demand function for students is and the demand function for lecturers is . Marginal cost is $1 per
ticket.

i) Define the concept price discrimination. (1 Marks)

ii) Calculate the amount of ticket the firm sells for students and lecturers. At what price
level? (6 Marks)

iii) Graphically show the profit maximization level of output, price and the amount of profit
for the students and lecturers. (3 Marks)

Question Six:
Using diagrams where necessary compare and contrast a Monopolistic Competitive Market
Structure and a Perfectly Competitive market Structure. (10 Marks)

Question Seven:
Colgate is one firm of many in the market for toothpaste, which is in long-run equilibrium.
i) Draw a diagram showing Colgate’s demand curve, marginal-revenue curve, average
total-cost curve, and marginal-cost curve. Label Colgate’s profit maximizing output and
price. (5 Marks)
ii) What type of demand curve would the firm experience? Why (3 Marks)
iii) What is Colgate’s profit? Explain. (2
Marks)

End of Exam
Happy Vacation!
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Micro-economics II BCM-122
Part one: Answer all the questions
1. Briefly explain the following related concepts (12marks)

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(a) Market structure and degree of competition

(b) Game theory, Best Response and Nash Equilibrium

(c) Market failure, Public goods and Externalities

2. Clearly state the first and second order profit maximization requirements (marginality
conditions). What are their counterpart requirements in terms of marginal revenue and
marginal cost curves? (4 marks)

3. Given the Average Revenue (AR) and Average Cost (AC) measurements; (5 marks)

(a) How you define these two measurements?

(b) What are the conditions for a firm to make a supernormal profit, zero economic
profit, or a loss?

(c) What is the formula to measure total profit which is expressed in terms of AR and
AC?

4. Suppose a given firm is operating in a perfectly competitive market structure. (5 marks)

(a) List at least three characteristics of this market structure.

(b) What type of demand curve the firm would experience? Why?

(c) Draw the cost and revenue curves for a typical competitive firm in the short run. For a
given price level explain how the firm chooses the level of output that maximizes
profit (assume the firm makes zero economic profit).

5. Suppose another firm is operating in monopolistically competitive market structure. (5

marks)

(d) Mention at least three characteristics of this market structure.

(e) What type of demand curve the firm would experience? Why?

(f) Draw the cost and revenue curves for a typical monopolistically competitive firm in
the short run. For a given price level and explain how the firm chooses the level of
output that maximizes profit (assume the firm makes supernormal profit).

Kinked demand curve model is an instrument to understand why oligopoly firms,

producing nearly similar products, stick to prevailing price level in order to avoid any
risk of losing the market share. (10 marks)

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(a) What are the three possible ways rival firms may react if a given firm changes its
price level?

(b) Use the kinked demand model and clearly discuss the possible reactions for any price
change by a single firm.

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TEST THREE MICROECONOMICS 22ND NOVEMBER, 2019

QUESTION ONE: In one sentence define the following terms: ( 2 marks each = 10 marks)
Indifference curve. b) MRS. c) Marginal cost. d) Market. e) Returns to scale.
QUESTION TWO : Complete the following table (½ mark each = 5 marks):
labour Output AP MP
0 8
1 18
2 29
3 39
4 47
5 52 QUESTION THREE : With the help of a graph explain the
relationship between MP and TP ( graph= 2.5 marks;
narration 2.5 Marks = 5 marks)
QUESTION FOUR: Complete the following table (1/2 mark each = 10 marks)
Output TC TVC TFC AF AVC MC
C
0 50 0 - - -
1 80 30
2 100 50
3 110 60
4 115 65
5 125 75

Total = 30 marks to be discounted to 10 marks

TEST THREE MICROECONOMICS 22ND NOVEMBER, 2019

QUESTION ONE: In one sentence define the following terms: ( 2 marks each = 10 marks)
Indifference curve. b) MRS. c) Marginal cost. d) Market. e) Returns to scale.
QUESTION TWO : Complete the following table (½ mark each = 5 marks):
labour Output AP MP
0 8
1 18
2 29
3 39
4 47
5 52

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QUESTION THREE : With the help of a graph explain the relationship between MP and TP
( graph= 2.5 marks; narration 2.5 Marks = 5 marks)
QUESTION FOUR: Complete the following table (1/2 mark each = 10 marks)
Output TC TVC TFC AF AVC MC
C
0 50 0 - - -
1 80 30
2 100 50
3 110 60
4 115 65
5 125 75

Total = 30 marks to be discounted to 10 marks

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SSE 121 INTRODUCTION TO MICROECONOMICS TEST ONE

1. Define the following terms: (a) scarcity ; (b) economic efficiency; (c) opportunity cost;
(d) rational thinking ;(e) economic system ( 2 marks each = 10 marks)

2. What is a PPC ( 2 marks) . Draw the PPC and indicate the following points for a farmer
producing maize and wheat: point “A” the farm is flooded; point “B” a combination of
maize and wheat are produced; point “C” unattainable position; and point “D” only
wheat is produced (put wheat on Y-axis) ( 2 marks each = 8 marks)

3. Make a distinction between positive and normative economics ( give two good examples
for each of them) 5 marks

4. Give any two exceptions to the law of demand and explain why they are exceptions( 5
marks)

5. Explain how the following events affect the equilibrium price and quantity of bread (a) a
new technology improves wheat production; ( b) consumers’ income reduces by 20
percent; (c) a cheaper substitute is offloaded on the market; (d) drought reduces wheat
output by 40 percent; (e) the government subsidises the cost of bread to consumers ( 3
marks for each graph and 2 marks explanation = 5 marks. Subtotal 20 marks)

6. Suppose the values of PED are given as follows: PED = 0.05; PED = 3.5; PED = 0 and
PED = 1. Interpret these results in terms of elasticity of demand and percentage change in
quantity demanded ( 2 marks each = 8 marks)

7. Under cardinal utility theory: (1) explain how consumer equilibrium is determined 4
marks ; (2) explain the relationship between total utility and marginal utility ( 6 marks)

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8.

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MULUNGUSHI UNIVERSITY
EXAMINATIONS
School Social sciences
Department Economics
Course Introduction to Micro
Economics
Course Code SSE 121
Date 9TH December,2019
Duration Three(3)Hours
Marks 60 Marks
Final examinations EXAMINATIONS
INSTRUCTIONS TO STUDENTS
1. This paper has SEVEN questions.

2. Answer any Six (6) questions, All the questions have equal 10 marks

READ THE INSTRUCTIONS AND QUESTIONS CAREFULLY

QUESTION ONE
Draw a production possibilities curve for a farmer producing maize and wheat and show the
following points. Put maize on the Y-Axis:
a) Point A where all resources are allocated to maize production only.

b) Point B where the farmer is producing both products.

c) Point C half of the farm is flooded by water.

d) Point D only wheat is produced and point

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e) Point E un attainable position. (2 marks each = 10 marks.)

QUESTION TWO
Complete the following table: ( 1Mark each = 10 marks
OUTPUT TC TFC AFC MC
1 80 30
2 110 30
3 130 30
4 160 30
5 200 30

QUESTION THREE
Complete the following table (1 mark each = 10 marks)
Labour Output AP MP
1 50
2 90
3 120
4 140
5 150

QUESTION FOUR
With the help of graphs :
A. Explain the relationship between total utility and marginal utility. (5 marks)

B. Explain the relationship between total output and marginal output. (5 marks)

QUESTION FIVE
A. Give four exceptions to the law of demand (4 marks)

B. Give four properties of indifference curves( 4marks)

C. Define the term market structure( 2 marks)

QUESTION SIX
With the help of graphs compare perfect competition and monopoly in the long run ( 10 marks)
QUESTION SEVEN
A. Complete the following table ( 1 Mark each = 5 marks)

SIZE OF PED TYPE OF ELASTICITY OF

DEMAND
PED = 5
PED = 0.005
PED = 1.00

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PED = 0.00
PED = ∞

B. On one diagram draw MC curve and average costs ( 5 marks)

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0SSE 121 TEST 1 OCT , 2019

QUESTION ONE : TRUE OF FALSE ( ONE MARK EACH = 8 MARKS)
(a)Microeconomics is concerned about the average price of all products; (b) Scarcity means
resources to satisfy human needs are sometimes limited in supply; (c) economic efficiency
means from limited resources we try to satisfy our needs as much as possible; (d) Trade off
involves an opportunity cost; (e) rational thinking means people make decisions at the margin;
(f) In a command economy the price mechanism plays an important role in allocating resources;
(g) An independent variable does not affect other variables; (h) In economics and finance
capital is money used to start or expand business .
QUESTION TWO ( 6 marks)
In one or two sentences, make a distinction between : (a) Micro and Macro economics (b)
Positive and Normative economics; (c) Autonomous and Derived Demand
QUESTION THREE (6 marks)
Draw the PPC with maize on the Y-Axis and rice on the X-axis and show the following points:
point A where a combination of maize and rice is produced; point B underutilized capacity; and
point C not achievable.

SSE 121 TEST 1 OCT , 2019

QUESTION ONE : TRUE OF FALSE ( ONE MARK EACH = 8 MARKS)
(a)Microeconomics is concerned about the average price of all products; (b) Scarcity means
resources to satisfy human needs are sometimes limited in supply; (c) economic efficiency
means from limited resources we try to satisfy our needs as much as possible; (d) Trade off
involves an opportunity cost; (e) rational thinking means people make decisions at the margin;
(f) In a command economy the price mechanism plays an important role in allocating resources;
(g) An independent variable does not affect other variables; (h) In economics and finance
capital is money used to start or expand business .
QUESTION TWO ( 6 marks)
In one or two sentences, make a distinction between : (a) Micro and Macro economics (b)
Positive and Normative economics; (c) Autonomous and Derived Demand
QUESTION THREE (6 marks)
Draw the PPC with maize on the Y-Axis and rice on the X-axis and show the following points:
point A where a combination of maize and rice is produced; point B underutilized capacity; and
point C not achievable.

SSE 121 TEST 1 OCT , 2019

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QUESTION ONE : TRUE OF FALSE ( ONE MARK EACH = 8 MARKS)

(a)Microeconomics is concerned about the average price of all products; (b) Scarcity means
resources to satisfy human needs are sometimes limited in supply; (c) economic efficiency
means from limited resources we try to satisfy our needs as much as possible; (d) Trade off
involves an opportunity cost; (e) rational thinking means people make decisions at the margin;
(f) In a command economy the price mechanism plays an important role in allocating resources;
(g) An independent variable does not affect other variables; (h) In economics and finance
capital is money used to start or expand business .
QUESTION TWO ( 6 marks)
In one or two sentences, make a distinction between : (a) Micro and Macro economics (b)
Positive and Normative economics; (c) Autonomous and Derived Demand
QUESTION THREE (6 marks)
Draw the PPC with maize on the Y-Axis and rice on the X-axis and show the following points:
point A where a combination of maize and rice is produced; point B underutilized capacity; and
point C not achievable.

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SSE121 : INTRODUCTION TO MICROECONPMICS : TEST ONE OCTOBER, 2017

ALL PROGRAMS
QUESTIION ONE: indicate whether the following statements are true or false ( 1 mark each):-
a. Economics is a natural science.

b. Adam Smith defined economics as a study of wealth.

c. Rational thinking means people make decisions on the basis of costs and benefits.

d. Economic efficiency means full satisfaction of human wants.

e. Movements along the PPF involve opportunity costs.

f. In economics production means the technical process of converting materials into

finished goods.

g. Without an entrepreneur factors of production can not produce anything.

h. In economics capital means investment funds.

i. Specialization may lead to lower productivity

j. Non-durable consumer goods are transformed during the process of consumption.

Question two:

a) The market for pizza has the following demand and supply schedules:

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Price Quantity Demanded Quantity Supplied

K4 000 135 26

K5 000 104 53

K6 000 81 81

K7 000 68 98

K8 000 53 110

K9 000 39 121

(i) Graph the demand and supply curves

(ii) What is the equilibrium price and quantity in this market?
(iii) If the actual price in this market were above the equilibrium price, what would
drive
the market price toward the equilibrium?
b) In the period september to december, Zambia experiences its summer period. Suppose
that during this time an earthquake occured that destroyed several bottled (mineral
water) factories. How would these events affect the market for bottled (mineral water)?

Question three

a) From the demand schedule given below calculate the price elasticity of demand and
total revenue. ()
Price (Kwacha) Quantity Demanded Price Elasticity Total Revenue
10000 20 ____ ____
8000 30 ____ ____
6000 35 ____ ____
4000 40 ____ ____

QUESTION
A. Using good examples, Make a clear distinction between micro and macro economics.

B. Briefly explain the link among fundamental economic problems of scarcity , choice and
opportunity costs faced by all communities.

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QUESTION FIVE
E. Make a distinction between the short run and long run period as applied in economics. (6 marks)

F. In the production function : QX = f( K,LN,E) t what do the letters K.L,N and E stand for . (4 marks )

G. With the help of a diagram explain the relationship between marginal utility and total
utility.(6 marks)

H. State the law of diminishing marginal utility and give any two reasons why this law is
important (4 marks)

QUESTION SIX
With the help of diagrams compare the equilibrium position of a company under perfect
competition and monopoly

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MULUNGUSHI UNIVERSITY
EXAMINATIONS
SCHOOL SOCIAL SCIENCES
DEPARTMENT ECONOMICS
COURSE INTRODUCTION TO MICRO ECONOMICS
COURSE CODE SSE – 121
DATE DECEMBER 2017
DURATION 3 HOURS
MARKS 60

FINAL EXAMINATION
Instructions:
 This examination paper consists of two parts. Answer any four
questions in PART I and each question carries 7.5 marks.

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 From PART II answer any two questions. Each question

carries 15 marks. Draw diagrams where necessary.

READ THE QUESTIONS CAREFULLY!

QUESTION ONE
D. Suppose the consumer’s income is K100 and the unit costs of oranges and apples are
K5.0 and K10.0 respectively. Prepare a budget line schedule and plot the budget line.
( put oranges in the Y-axis)

E. Briefly explain the difference between normative and positive economics. (5 marks)

F. On one diagram show the relationships between output, MC and average costs. ( 5 marks)

QUESTION TWO
C. Complete the following table. ( ½ mark each = 10 marks)

Labour Output AP MP
1 2
2 10
3 21
4 36
5 55
6 63
7 70
8 72
9 72
10 68

D. Mention any 5 factors that affect demand ( 5 marks)

QUESTION THREE
With the help of diagrams explain what would happen to equilibrium price and quantity of fresh
milk in the town of Kabwe when the following events take place ( 3 marks each)
vi. The population of Kabwe increases.

vii. The population of diary cattle increases by 30 %.

viii. Cattle disease kills 40% of diary cattle.

ix. A cheap substitute ( powdered milk) floods the market.

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x. Farmers are trained in diary farming

QUESTION FOUR
E. From the indifference curve schedule given below draw the indifference curve: ( 3 marks)

COMBINATIO GOOD Y GOOD

N X
A 21 1
B 15 2
C 10 3
D 6 4
E 3 5
F 1 6
F. Mention any four (4) properties of indifference curves ( 4 marks)

G. Complete the table below. ( 5 marks)

PED TYPE OF
COEFFICIENT ELASTICITY
OD DEMAND
0.0001
1.0001
0.0000
∞
1.000

H. Mention any three assumptions of indifference curves analysis. (3 marks)

QUESTION FIVE
State whether the following statements are true or false:
xi. Along the indifference curve total utility changes from one point to another depending
on the quantities of the two products consumed.

xii. Inverse relationship means price and demand move in the same direction

xiii. Economic efficiency means satisfying our needs as much as possible from our
limited resources.

xiv.Rational thinking means to consider benefits only in decision making

xv. Opportunity cost means the value the value of the second best alternative foregone.

xvi. A company under monopoly is a price taker

xvii. In the long run a company under monopolistic competition enjoys abnormal
profits.

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xviii. A market is a place where goods are sold.

xix. Change in a factor that affects demand other than price will cause a movement
along the demand curve.

xx. If demand is elastic to increase sales volume a firm should increase the price of the
product.

QUESTION SIX

A. Briefly define the term “production possibility frontier” ( 2 marks) and draw a diagram
for a farmer who produces Soya beans and Wheat, given the following information.
i) Point A, where a farmer produces Soya beans only. [1 mark]
ii) Point B, where a farmer is producing a combination of Soya beans and Wheat.
[1 mark]
iii) Point C, where a farmer is under utilising resources. [1 mark]
iv) Point D, which is unattainable. [1 mark]

B. Distinguish between perfect elasticity and perfect inelasticity of demand with the aid of
diagrams and provide brief notes.[4 marks]
C. Calculate the marginal and average costs from the information given in the table below:
( ½ mark each = 5 marks)

Outpu 0 1 2 3 4 5 6 7 8 9 10
t
TC 12 27 40 51 60 70 80 91 104 120 150

RESERVE QUESTIONS

QUESTION TEN

A. What are the features of an Oligopolistic Market? [5 marks]

B. Mention any five factors that can cause a shift in the demand curve? [5 marks]
C. Distinguish between Marginal Rate of Technical Substitution and Marginal rate
of Substitution concepts. [5 marks

QUESTION THREE
C. Giving examples, explain the difference between micro and macro economics (5 marks)

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D. Define the following terms: (2 marks each = 10 marks))

vi. Oligopoly.

vii. Marginal rate of substitution

viii. Cross elasticity of demand

ix. Economies of scale

x. Economic efficiency

xi.

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MULUNGUSHI UNIVERSITY
EXAMINATIONS
SCHOOL SOCIAL SCIENCES
DEPARTMENT ECONOMICS
COURSE INTRODUCTION TO MICRO ECONOMICS
COURSE CODE SSE – 121
DATE DECEMBER 2017
DURATION 3 HOURS
MARKS 60

FINAL EXAMINATION
Instructions:
 This examination paper consists of two parts. Answer any four
questions in PART I and each question carries 7.5 marks.
 From PART II answer any two questions. Each question
carries 15 marks. Draw diagrams where necessary.

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READ THE QUESTIONS CAREFULLY!

PART I

QUESTION TEN

D. Briefly define the term “production possibility frontier” ( 2 marks) and draw a diagram
for a farmer who produces Soya beans and Wheat, given the following information.
v) Point A, where a farmer produces Soya beans only. [1 mark]
vi) Point B, where a farmer is producing a combination of Soya beans and Wheat.
[1 mark]
vii) Point C, where a farmer is under utilising resources. [1 mark]
viii) Point D, which is unattainable. [1 mark]

E. Distinguish between perfect elasticity and perfect inelasticity of demand with the aid of
diagrams and provide brief notes.[4 marks]
F. Calculate the marginal and average costs from the information given in the table below:
( ½ mark each = 5 marks)

Outpu 0 1 2 3 4 5 6 7 8 9 10
t
TC 12 27 40 51 60 70 80 91 104 120 150

QUESTION ELEVEN

D. What are the features of an Oligopolistic Market? [5 marks]

E. Explain why the price and output under Oligopoly is indeterminate.[5 marks]
F. Explain why the shape of the demand curve under Oligopoly is “Kinky” [5. marks]

QUESTION TWELVE
A. What are the factors that cause a shift in the demand curve? [5 marks]
B. Distinguish between Marginal Rate of Technical Substitution and Marginal rate
of Substitution concepts. [5 marks]
C. What are Indifference Curves? State and give brief notes on the properties of the
Indifference Curves. [5 marks]

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1. You are given the following information about market for Train wagons.
Market Demand: P= 400-4Q
Market Supply: P= 4Q
i) Find the equilibrium price and quantity in this market. [1 mark]
ii) Explain the term Consumer Surplus and find its value from the above market
information.[3 marks]
iii) What is the value of Producer Surplus in this Market?[1.5 marks]
iv) Suppose, Government imposes an excise tax of $80 per wagon on producers in
this market. What will be the number of wagons sold in this market with the
imposition of tax? [1.5 marks]

4. The Demand Function for a firm’s product is given by Q=1000-200P.

(i)If the price of a product is K3 per unit, find the price elasticity of demand at this price.
[2.5 marks]

5. (i) Define Demand for a commodity and explain the various factors which determine
demand for a commodity. [4.5 marks]
(ii) State and explain three (3) exceptions to the law of demand giving examples in
each case.

PART II

6. (a) Suppose a market consists of three consumers, A, B and C whose individual

demand functions are given below:
(A): P= 35-0.5Q (B): P= 50-0.25Q (C): P= 40-2.0Q

(i) Find the market demand function for the commodity [4.5 marks]

(ii) If the market supply function is given by Q=40+3.5P, determine equilibrium price
and quantity. [3 marks]

(b) Given the demand function Qd= 30-5P, develop a demand schedule and derive a
demand curve with at most six entries. [3 marks]
(c) If the Supply function for (6b) is Qs=P. Calculate the equilibrium price and
quantity. [3 marks]
(d) State and briefly explain three (3) factors that affect supply. [1.5 marks]

7. Consider the following demand functions:

(i) P= 4 [5 marks]

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(ii) P= 100-4 [5 marks]

(iii) P= 1+3/2Q- 4/3Q2 [5 marks]

Calculate the total revenue, average revenue and marginal revenue for each of the
above functions. At what point is total revenue maximised in each case?

8. Given the short-run cost function of TC = 2,000 + 25Q calculate,

(a) Fixed cost? [2.5 marks]
(b) The average variable cost for Q = 1,000? [2.5 marks]
(c) Marginal cost of production? [5 marks]
(d) Average fixed cost? [5 marks]

NB: Part two not for you

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MULUNGUSHI UNIVERSITY
SCHOOL SOCIAL SCIENCES
DEPARTMENT ECONOMICS
COURSE INTRODUCTION TO
MICROECONOMICS
COURSE CODE SSE 121
DATE SEPTEMBER, 2016
DURATION 3 HOURS
MARKS 60/100 (DEF./SUPP.)
READ THE INSTRUCTIONS AND QUESTIONS VERY CAREFULLY

ODL DEFERRED/SUPPLEMENTALY EXAMINATIONS

INSTRUCTIONS TO STUDENTS
4. Read these instructions carefully.

5. This paper contains SIX (6) questions.

6. Answer any FOUR (5) QUESTIONS . All the questions carry equal marks

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QUESTION TWO
C. What is an equilibrium price ( 2marks)

D. Given below is a combined supply and demand schedule :

PRICE DEMAN SUPPLY

PER KG D IN KGS IN KGS
1,200 400 100
1,400 300 150
1,600 200 200
1,800 150 250
2,000 100 300

(6) On one diagram sketch the demand and supply curve. Use a graph paper. ( 5 marks)

(7) What is the equilibrium price and quantity ( 2 marks)

(8) Give any three factors that affect supply. ( 3 marks)

(9) Give any four factors that affect demand (4 marks)

(10) Give any four exceptions to the law of demand( 4 marks)

QUESTION THREE
D. Draw a production possibilities curve for a farmer producing maize and wheat and show
the following points:

f. Point A where all resources are allocated to maize production only.

g. Point B where the farmer is producing both products

h. Point C : half of the farm is flooded by water

i. Point D. only wheat is produced.

j. Point E : un attainable position position

2 marks each = 10 marks.

E. Mention any four factors which can cause the PPF to shift inwards ( 8 marks).

F. Define the term opportunity cost ( 2 marks )

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QUESTION FOUR
D. With the help of graphs explain the relationship between output and the average fixed cost and the average
variable costs ( 8 marks)

E. Complete the following table:-

OUTPUT TFC TVC AFC AVC

1 50 30
2 50 50
3 50 60
4 50 65
5 50 80

ONE MARK EACH = 10 MARKS

F. Define the term marginal cost. (2 marks)

QUESTION FIVE
I. Make a distinction between the short run and long run period as applied in economics. (6 marks)

J. In the production function : QX = f( K,LN,E) t what do the letters K.L,N and E stand for . (4 marks )

K. With the help of a diagram explain the relationship between marginal utility and total
utility.(6 marks)

L. State the law of diminishing marginal utility and give any two reasons why this law is
important (4 marks)

QUESTION SIX
With the help of diagrams compare the equilibrium position of a company under perfect
competition and monopoly ( 20 marks)

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