W1-2-60-1-6

JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY

UNIVERSITY EXAMINATIONS 2018/2019
YEAR II SEMESTER I EXAMINATION FOR THE DEGREE OF BACHELOR OF
DEVELOPMENT STUDIES AND COMMUNITY DEVELOPMENT AND ENVIRONMENT
HDS 2205: MICROECONOMICS
DATE: AUGUST 2019 TIME: 2 HOURS
INSTRUCTIONS: ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS.

QUESTION ONE (COMPULSORY)

a. Distinguish clearly between the following terms as used in economics. (6 marks)

i. Macroeconomics and macroeconomics.

ii. Normative and deductive methods of economics.

iii. Demand schedule and demand curve.

b. The price of 13kgs cooking gas increased from ksh2500 to ksh3000 of the beginning for
this products decreased from 300 units to 200 units at Kenol Petrol station. Calculate
the price elasticity of demand. (4 marks)

c. Using the stages of production in the short run, illustrate and explain why it does not
make any economist sense to produce in stage I or III. (6 marks)

d. Name and explain at least four goods that economics would aim to achieve.
(8 marks)

e. Highlight four characteristics of indifference curves. (4 marks)

f. Highlight two sources of monopoly power. (2 marks)

QUESTION TWO

a. Explain three areas in which the concept of elasticity can be applied. (6 marks)

b. Explain four ways in which the government can influence demand for a commodity.
(8 marks)

c. List at least six features of a free enterprise market system. (6 marks)

QUESTION THREE

a. Discuss factors which could influence quantity demanded of rice in Kenya.

(10 marks)

b. Using a well labeled diagram discuss how equilibrium is achieved in a market for
maize flour. (10 marks)

QUESTION FOUR

a. Discuss any five factors which could help to determine the size of any firm.
(10 marks)

b. Discuss any five differences between competitive and non-competitive market

structures. (10 marks)

QUESTION FIVE

a. Discuss the relevance of micro economics in development. (10 marks)

b. State and explain any five advantages of division of labour and specialization.
(10 marks)