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UGANDA MARTYRS UNIVERSITY

FACULTY OF BUSINESS ADMINSTRATION AND MANAGEMENT
BUSINESS ECONOMICS TEST FOR MBA PART TIME RUBAGA (2022-2023)
(SPECIAL CONSIDERATION FOR THOSE THAT MISSED)
AS ON 30th OCTOBER 2022
Time allowed: 1: 20minutes

SECTION A: Attempt all by circling or writing down the most appropriate answer or
filling in appropriately.
1. The study of business economics is composed of

A. Positive economics
B. Microeconomics
C. Normative economics
D. Macro economics
E. B and D

2. In the market economy, economic activity is guided by

A) The government
B) Corporations
C) Central planners
D) The president
E) Forces of demand and supply
3.Which of the following is not among the reasons why we need the government?
A. The government provides social services welfare services the poor and the needy
B. The government provides public goods and services
C. The government regulates market when there is a market failure
D. The government provides free food for every one
E. The government imposes laws and control to protect competitiveness of the industry
4. Monetary indiscipline by the central bank results into
A. Cost push inflation
B. Stagflation
C. Monetary inflation
D. Demand pull inflation
E. All the above
5. Which of the following is not a primary cause of business cycle fluctuations according to
the real business cycle theory?
A. A change in the production function
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B. A change in the size of the labor force

C. A change in money supply
D. A change in real quantity of government purchases
6 Change in demand assumes constant
a. Income
b. Demand
c. Price
d. Supply
7. Disequilibrium occurs when
a. Supply equals demand
b. Supply exceed demand
c. Demand exceed supply
d. Surplus is constant
e. b&c
8.Short run Productions assumes
a. Constant supply
b. Constant demand
c. Fixed factors of production
d. Variable factors of production
9. The short run average cost curves are U- shaped because of
a. Economics of scale
b. Law of diminishing returns
c. Diseconomies of scales
d. Returned to scale
e. Fixed costs
10.An outward shift of the PPF means
A. Increased size of the government
B. Economic growth
C. More consumption
D. More equality among citizens
E. None of the above
11..The PPF of the nation shows
A. How much production takes place with the existing resources?
B. The prices of products
C. The population
D. All the above
12.Which term describes the way a society organizes the production, distribution, and consumption of goods
and services to meet people's needs and wants?
A. Mixed system
B. Economic system
C. Capitalism
D. Supply and Demand
13..The production functions shows
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A. Prices of inputs and outputs

B. Relationships between Output and input
C. Various combination of input
D. All of the above
14.Price discrimination is a situation when a producer
A. Charges of different prices in different markets
B. Charges same prices
C. Chagres many prices
D. All of the above
15.The following are the key economic problem except
A. Scarcity
B. Poverty
C. Opportunity cost
D. choice
16. The following are perfect market except
A. supermarkets
B. universities
C. private consultant
D. petrol stations
17The main ways of representing economic models are
A. graphs and tables
B. schedules and figures
C. laws and bi-laws
18..Models are used to
A. show cause and effect relationship in behavior
B. To explain graphs
C. To monitor and evaluate
D. To explain equilibrium
19..In reality all economies are
A. Capitalistic
B. Mixed
C. Planned
D. Market
20.The study of behavior of the overall economy is
F. Positive economics
G. Microeconomics
H. Normative economics
I. Macro economics
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SECTION B: Attempt all by providing short but concrete answers

21(a) Briefly explain how business economics differs from Economics and how it can be applied
in the theory and practice of business administration (6mk)
(b) Given the demand and supply function for juice at UMU Lubaga canteen, QD=20-4P, QS= -5+8P.
i)Calculate the equilibrium price and quantity (4mks)
ii) Assuming the University council fixes the price at 9sh, state whether it’s a maximum price or the
Minimum price. (2mks)
22a) Distinguish between change in demand and change in quantity demanded (4mks)
b) Assuming the price of medicines in most pharmacies remains constant, Explain why the
demand for medicines in top first districts may change.(10mks)
c) With an illustration, distinguish between marginal rate of product transformation and
marginal rate of substitution (5mks)

23).Several concepts have been covered in this course module Business Economics. Such may
include but not limited to, consumer surplus, producer surplus, costs, economic systems,
scarcity, Pricing strategy, growth strategy, equilibrium, elasticity, national income, money and
banking among others. Choose any five ( 5 )from the list or even beyond and briefly explain
how and where you can apply them in the business practicing environment.(10mks)
Wishing You Good Luck