MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS 2013/2014 ACADEMIC YEAR
FOURTH YEAR SECOND SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF BUSINESS MANAGEMENT
COURSE CODE: BBM 466
COURSE TITLE: MANAGERIAL ECONOMICS
DATE:22ND APRIL 2014 TIME: 2.00PM – 5.00PM
INSTRUCTIONS TO CANDIDATES
SECTION A is compulsory
Answer any three questions in SECTION B
This paper consists of 3 printed pages. Please turn over.
Question one
Managerial economics focuses on decisions that relate to maximizing profits or maximizing the value of the firm. Discuss the five basic principles that comprise effective management. (10marks)
Using illustrations explain the difference between economies and diseconomies of scale. (6 marks)
Distinguish between implicit and explicit costs. (3 marks)
Define the term cross price elasticity of demand and clearly explain its value for substitutes and complementary commodities (6 marks)
Question two
State three characteristics of each of the following markets
Perfect competition market ( 3 marks)
Monopoly market ( 3 marks))
Monopolistic market ( 3 marks)
Oligopoly market ( 3 marks)
Duopoly market ( 3 marks)
Question three
The average revenue and average cost functions for a firm are given as follows.
Find the level of Q and P where profits of a firm will be maximized. (5 marks)
Explain the economic rationale that calls upon the establishment of a firm under monopoly powers (10 marks)
Question four
a) Explain the term demand forecasting (3 marks)
b) Explain any four survey methods of demand forecasting.(12 marks)
Question five
a) State the law of variable proportions (3 marks)
b) What are key assumptions that underline the law of variable proportions (3 marks)
c) Discuss fully the three main stages associated with law of variable proportions
(9 marks)
