NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
JANUARY/FEBRUARY 2013 EXAMINATION

COURSE CODE: MBA 817                                        CREDIT UNITS: 2

     COURSE TITLE:  Micro economics                          TIME ALLOWED: 2 HOURS

 Instructions: 1. Attempt question number one (1) and any other two (2).

                         2. Question number 1 is compulsory and carries 30 marks                              while  the other 2 questions carry 20 marks each.

                         3. Present all your points in coherent and orderly manner.

Question 1:

1. Given that in 1993, the quantity demand for a bag of rice was 100 at ₦1200 while in 1994, the quantity demanded was 150 bags at ₦1500. Calculate the point elasticity.
2. From the table below, obtain the price elasticity of demand for commodity P.                                                                                                            10marks

                                                                                                                        10marks

3. Write short note on any two of the following

1. Inelastic supply
2. Perfectly inelastic demand
3. Elastic supply
4. Perfectly elastic supply                                                              10marks

Question 2:

1. Given that demand function of a commodity

DD = 25 – 0.5p and supply function

SS = 10 + 1.0p

1. Calculate the equilibrium price and quantity, if the government imposes tax on the commodity, say X3 on per unit.
2. Determine the new equilibrium price and quantity.
3. Illustrate with a diagram, the effect of government tax policy on price and quantity. 15marks

2. With  the aid if diagram state the law of demand and supply                          5marks

Question 3:

1. What are the basic assumptions of cardinality approach to consumer behaviour?   10marks
2. What are the shortcomings of Revealed preference curve approach?               5marks
3. List the factors influencing the demand and supply of Garri?                            5marks

Question 4:

1. State the mathematical relationship of AP, MP and TP.                                               20marks

Question 5:

Suppose a consumer’s utility function is written as U = 2q₁ q₂ where q₁ and q₂ are commodities 1 and 2 respectively, let their respective prices be given as: P₁ = N2, P₂ = N8 and the income be given as: Y = N240, using the above data

1. find the maximum values of q1 and q₂ that this consumer will consume

show that the budget constraint is satisfied in the sense that all the income is spentshow that the equilibrium marginal principle is fulfilled.                                20marks