UNIVERSITY EXAMINATION 2017/2018

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

BAS/BDS
REGULAR

UNIT CODE: BED1105 UNIT TITLE: INTRODUCTION TO ECONOMICS

DATE: AUGUST 2018 SPECIAL/SUPPLEMENTARY TIME:2 HOURS

INSTRUCTIONS: ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS

1. a) Economics is a field of study that promotes efficient use of resources for the
benefits of the society. Justify this statement clearly showing why studying it is
important by the same society (5 Marks)

b) Write short notes on the following;

i) Movement along and shift in demand curve
ii) Determinants of supply
iii) Price control
iv) Elasticity of demand
v) Elasticity of supply (20 Marks)

c) Specialization refers to the process where people concentrate on those

activities where they are best at. Discuss five merits that come with it.

Library Copy Page 1

 2. a) Explain the advantages and disadvantages of the three economic systems.
(14 Marks)
b) Using the relevant revenue and cost curves, discuss the supernormal profits
made by the monopolist. (6 Marks)

3. a) Distinguish between maximum and minimum price controls and explain the
consequences of each point of controls. (10 Marks)

b) The table shows an individual demand for commodity X. Price per unit in kshs
PRICE Qd
6 65
5 70
4 80
3 90
2 100
1 115
Demonstrate the demand curve and explain relationship between the variables.
(10 Marks)

4. Discuss the features of the following markets;

i) The perfect competition market
ii) The monopolist market
iii) The oligopoly market
iv) The duopoly market (20 Marks)

5. a) Discuss the main ideological differences between the cardinalist and ordinalist
theories on the consumer behavior. (10 Marks)

b) Using the following figures determine the revenues in the production theory.
Quantity Price TR AR MR
10 10
20 20
30 30
40 40
50 50
(10 Marks)

Library Copy Page 2