UNIVERSITY EXAMINATIONS: 2021/2022
SCHOOL OF TECHNOLOGY
ORDINARY EXAMINATION FOR THE DIPLOMA IN BUSINESS
INFORMATION TECHNOLOGY
DBIT 304: GENERAL ECONOMICS
DATE: NOVEMBER 2021 TIME: HOURS
INSTRUCTIONS:
ANSWER QUESTION ONE (compulsory) AND ANY OTHER 2 QUESTIONS
QUESTION ONE (20 MARKS)-compulsory
(a) Explain the relationship between the per capita income and the living standards of the people
in a country that is currently affected by COVID-19 (5 Marks)
(b) The following table shows the costs by a firm operating in the short run period. Fill in the
missing figures. Hence plot each cost against the output (on the same Cartesian plane)
(c) (i) Define the term price elasticity of demand (1 Mark)
(ii) Discuss THREE factors affecting price elasticity of demand in an economy (3 Marks)
(d) (i) Distinguish between the use of Tariffs and Quota system as forms of restrictions in
international trade. (3 Marks)
(e) Give THREE reasons why a country may consider to restrict international trade. (3 Marks)
QUESTION TWO (15 MARKS)
(a) By using relevant examples, distinguish between monopolistic competition market and
oligopoly market. (4 Marks)
(b) Discuss FOUR monetary policies that an economy may implement to fight inflation
(4 Marks)
(c) (i) By citing examples, explain what is meant by cartels. (3 Marks)
(ii) Discuss FOUR conditions necessary for the formation and success of cartels.
(4 Marks)
QUESTION THREE (15 MARKS)
(a) Kenya is currently ranked as a developing economy. In order to enhance economic growth,
the government of this country Kenya has come up with an economic recovery strategic
paper geared towards realising economic development within a period of 30 years.
Required:
(i) Explain what you understand by economic growth and development. (2 Marks)
(ii) Discuss four factors that might hinder Kenya from realising this objective suggest
possible measures that it should put in place to overcome these impediments.
(6 Marks)
(b) Distinguish between price discrimination and product differentiation (4 Marks)
(c) Highlight THREE necessary conditions for successful price discrimination. (3 Marks)
QUESTION FOUR (15 MARKS)
(a) Discuss THREE factors affecting supply of industrial products in the market. (3 Marks)
(b) Kenya is one of the countries that have been affected by COVID-19.
(i) Identify any THREE key sectors and show how the effects of COVID-19 has affected
the economic performance and the overall effect in the Kenyan economy. (3 Marks)
(ii) In reference to your course, discuss the benefit of studying economics and the
contribution this would have on your identified sectors in part (i) above. (3 Marks)
(c) Explain what is meant by price controls in an economy (2 Marks)
(d) Explain why for most agricultural products in Kenya, their prices are usually low and always
fluctuating and suggest possible measures that could help stabilize these prices. (4 Marks)
(Total 50: MARKS)
