NKUMBA

UNIVERSITY

SCHOOL OF BUSINESS ADMINISTRATION

MICROECONOMIC THEORY
LEVEL: DEGREE/DIPLOMA

Instructions: Attempt all the questions

Qn.1 Give the following equations: calculate the equilibrium price and quantity: (a) Qd Qs (b) = = 20 + 32P 4 + 64P

Qs = 3p Qd = 18

(c)

Qs 4p = 0 Qd - 20 = 0

Please note that: Qd = Quantity Demanded Qs = Quantity supplied P Qn.2 (a) commodity. (b) The Income of a consumer is 10,000/= and his demand for sugar is 5kgs. When his income is increased to 12,000/= his demand for sugar becomes 7kgs. Calculate the income elasticity of demand. Qn 3: a) Given a demand function as: Qd = 25-10p and a supply function as Qs = 25p. Determine the equilibrium price and equilibrium price. b) The sales data of Aristock Booklex book store produces a demand function as: Required: Q = 50-5p. = Price Explain the factors that determine the quantity supplied of a

i)

From the demand function above, establish the demand schedule and draw a demand curve.

ii) iii) iv)

Find the price if 250 copies were sold. Find the price for zero sales Find book sales at zero price

Qn 4: Suppose the market demand in a perfectly competitive industry is given by: QD= 700-50p and market supply function is QS= 400+25P. Required: Find the market equilibrium price. ii) Find the market demand schedule and the market supply schedule at the following prices: shs. 9, 8, 7, 6, 5, 4, 3, 2, and 1 Qn: 5. a) Define the term equilibrium b) Differentiate between partial and general equilibrium

COURSEWORK QUESTIONS Group A: Perfect Competition Perfect Competition defined Characteristics of Perfect Competition Price and output Determination in short run of the firm Group B: Perfect Competition Short run Profit and Loss. Long run Equilibrium of the firm Group C: Monopoly The MR curve and Elasticity The short run Equilibrium under Monopoly Group D: Monopoly Regulation of Monopoly (per unit tax) concept Regulation of Monopoly (Lump sum tax) concept Price Discrimination Stages and Types. Group E: Monopolistic Competition Monopolistic Competition defined. Short and long run Equilibrium under Monopolistic Competition. Group F: Monopolistic Competition Excess Capacity Analysis Group G: Oligopoly The Cournot Model, The Chamberlin Models The Kinked Demand Curve Model Group Oligopoly The Centralized Cartel Model. The Market Sharing Cartel Models. Price Leadership Model Group H: Oligopoly The Long-run under Oligopoly and Duopoly

Group I: Oligopoly The short-run under monopoly and Duopoly