BIT 1308 GENERAL ECONOMICS KCA Past Paper

UNIVERSITY EXAMINATIONS: 2011/2012
YEAR 1 EXAMINATION FOR THE BACHELOR OF SCIENCE IN
INFORMATION TECHNOLOGY
BIT 1308 GENERAL ECONOMICS
DATE: APRIL 2012 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One and Any other Two Questions

QUESTION ONE
(a) Clearly explain the role of international trade protection to developing economies citing the
various forms of protection. (10 marks)
(b) Many regions in the country have continued to be deficient in some key factors of production
because of immobility of the factors. Explain how factor immobility can be improved.
(10 marks)
(c) Explain how understanding the concept of demand is useful to business owners. (10 marks)
QUESTION TWO
Of late, the economy has been suffering from high inflation rate. Explain the key causes to this and
state the control measures to be put in place to alleviate the problem. (20 marks)
QUESTION THREE
(a) Information technology is core to the success of any economy. Explain how it can be used in jobs
creation and eventual realization of growth. (10 marks)
(b) Using a diagram explain why prices are rigid in oligopoly market structures stating the features of
the market. (10 marks)
QUESTION FOUR
(a)Using diagrams, explain the concept of scarcity and choice in relation to production theory.
(8 marks)
(b)Banks play a key role in economic growth and development of a country. Explain the key roles
played by the banks in the development process. (12 marks)
QUESTION FIVE
i) From the table below, compute the following at all levels of output:
(a) Average revenue
(b) Marginal revenue
(c) Average cost
(d) Marginal cost
(e) Distinguish between Marginal cost and Marginal revenue.
(10 marks)
Quantity TC Total Revenue
Units per week £ £
0 10,000 ——————–0.0
10 11,000 ——————– 2,100
20 11,600 ——————– 4,200
30 12,000 ——————– 6,300
40 13,000 ——————– 8,400
50 14,000 ——————-10,500
60 15,000 ——————-12,600
70 16,000 ——————- 14,700
80 17,000 ——————- 16,800
90 18,150 ——————- 21,000
100 19,500 ——————- 23,100
ii)Government policy can be used to boost both production and consumption in the economy. Explain the
government policies and how they can be used to stimulate production and consumption.
(10 marks)

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