UNIVERSITY EXAMINATIONS: 2017/2018
EXAMINATION FOR THE DIPLOMA IN BUSINESS INFORMATION
TECHNOLOGY
DBIT304 GENERAL ECONOMICS
DATE: AUGUST, 2018 TIME: 1 ½ HOURS
INSTRUCTIONS: Answer question One and ANY other two questions.
QUESTION ONE
a) i) Explain the term Economics. 3 Marks
ii) Distinguish between scarcity, opportunity cost and choice. 4 Marks
b) Outline the main determinants of demand. 5 Marks
c) Discuss the impact of poverty in a society. 4 Marks
d) Explain the main types of costs incurred by a firm. 5 Marks
e) With the aid of a diagram, explain the term equilibrium. 4Marks
f) List the main characteristics of money. 5 Marks
QUESTION TWO
a) Consider the following costs:
Output 1 2 3 4 5 6 7 8 9
Costs sh. ’000’ 22 24.5 26.8 30 32 35 39 42 47
The fixed costs amount to sh. 12000 per period.
Required:
i) Determine the variable costs based on the activity schedule. 2Marks
ii) Determine the total costs, and average costs and marginal costs of each activity level (output).
8Marks
b) Explain the term marginal cost of a product. 5 Marks
c) Explain the main factors that influence the costs of production. 5Marks
QUESTION THREE.
a) Explain the main effects of unemployment in an economy. 6 Marks
b) List the possible benefits of growth and development in an economy. 8Marks
c) Is it possible for an economy to grow and at the same time achieve development?
6 Marks
QUESTION FOUR.
a) By means of a diagram show the factors that cause a rightward shift in supply curve.
5Marks
b) i) distinguish between price elasticity of demand and price elasticity of supply.
5Marks
ii) Show that there is a difference between elastic demand, inelastic demand and unitary price
elastic demand. 5 Marks
c) Show that the demand curve is negatively sloping and justify. 5Marks
QUESTION FIVE.
a) Discuss the main factors of production ( show the rewards of each) 6 Marks
b) Discuss the role production in an economy such as Kenya. 6Marks
c) Kenya has been experiencing major milestones in development. List the key areas that have
experienced growth in recent past in Kenya. 8Marks
