EET 100.docx

# 10 marks d briefly explain the concept of scarcity

• Homework Help
• 2

This preview shows pages 1–2. Sign up to view the full content.

(10 marks) d) Briefly explain the concept of scarcity and opportunity cost. (5 marks) Question Two a) State the assumptions of cardinal approach to utility. (5 marks) b) Using a well labeled diagram explain the relationship that exist between average total cost, average variable cost and marginal cost. (10 marks) c) Graphically demonstrate the consumer surplus. (5 marks) Page 1 of 2 INVOLVEMENT IN ANY EXAMINATION IRREGULARITY SHALL LEAD TO DISCONTINUATION

This preview has intentionally blurred sections. Sign up to view the full version.

Question Three a) Explain the sources of monopoly power. (6 marks) b) Using a well labeled diagram, explain the effect on the equilibrium price and quantify of a sales tax imposed on the substitute of the product. (6 marks) c) With an aid of necessary tools proof that price ceilings and price floors can become source of non-clearance of market. (8 marks) Question Four The demand function for a good k is given by: Q k = 1000 – 0.25 pk – 0.65P w + 3P x + 8M Where Q k = Quantity demand of good k P k = Price of good k P w and P x – Prices of related good W and X M = income Given P x = sh.500, P k = shs.800, P w = sh.2000 M = shs.1,000 Required: i) Compute income elasticity of demand. From the income elasticity of demand is good K a luxury good or a necessity good? Explain. (7 marks) ii) Compute cross price elasticities of demand and interpret your results and show how commodity k and w are related. (6 marks) iii) Explain the importance of the concept of elasticity. (7 marks) Question Five a) Show the graphical derivation of demand curve using indifference curve approach. (10 marks) b) Discuss characteristics of perfect competition and explain why individual firms are price takers. (10 marks) Page 2 of 2 INVOLVEMENT IN ANY EXAMINATION IRREGULARITY SHALL LEAD TO DISCONTINUATION
This is the end of the preview. Sign up to access the rest of the document.
• Winter '17
• PAUL MWANGI

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern