DBIT 201  MICRO ECONOMICS .

UNIVERSITY EXAMINATIONS: 2016/2017
EXAMINATION FOR THE DIPLOMA IN BUSINESS INFORMATION
TECHNOLOGY
DBIT 201 MICRO ECONOMICS
SPECIAL/SUPPLEMENTARY EXAMINATION
DATE: JULY, 2017 TIME: 2 HOURS
INSTRUCTIONS: Answer Question One & ANY OTHER TWO questions.

QUESTION ONE
(a)Define the following terms as used in economics;
(i)Scarcity
(ii) Choice
(iii)Opportunity cost
(iv)Wealth (4 Marks)
(b)Discuss any 3 exceptional cases to the law of demand. (6 Marks)
(c ) By giving at least 5 features on each, distinguish between the free market system and the planned
economy. (10 Marks)
QUESTION TWO
(a)Discuss any five factors affecting individual’s demand for a commodity. (5 Marks)
(b)Distinguish between excess demand and excess supply as economic forces (4 Marks)
(c)Using an illustration, define what is meant by market equilibrium (2 Marks)
(d)Define the term economic resources and give any 2 characteristic of economic resources in an
economy (3 Marks)
(e ) Using an illustration, distinguish between the movement along the demand curve and shift of the
demand curve. (6 Marks)
QUESTION THREE
(a)Discuss any 6 factors affecting supply of a commodity in the market. (6 Marks)
(b ) Distinguish between price discrimination and fancied product differentiation. (4 Marks)
(c )Differentiate between an oligopoly market and monopolistic competition market. (4 Marks)
(d)Distinguish between maximum price controls and minimum price controls (4 Marks)
(e)Give any 2 reasons why study economics in business information technology (2 Marks)
QUESTION FOUR
(a)Discuss any 4 features of perfect competition market (4 Marks)
(b)Outline any 3 features of monopoly market. (3 Marks)
(c)Discuss any 4 sources of monopolies in an economy (8 Marks)
(d )Discuss any 3 disadvantages of monopolies in an economy (3 Marks)
(e)Highlight any 2 disadvantages of monopolies in an economy (2 Marks)
QUESTION FIVE
(a)Define the term price controls (1 mark)
(b)Discuss 4 advantages of price controls in an economy. (4 Marks)
(c)Highlight any 3 disadvantages of price controls in an economy (3 Marks)
(d)Kenyan farmers have been experiencing low incomes from agriculture, give at least 5 reasons why this
has been the case and suggest possible measures to solve this problem. (10 Marks)
(e)Give any 2 reasons why the government in an economy would find it necessary to interfere with
economic activities (2 Marks)

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