Principles of Microeconomics (ECNC2101)
Higher Institute of Commerce and Management (HICM)
Semester: First Semester
Level: 200
Year: 2018
Question 1 (10 marks)
Write short notes on the following types of equilibra in the goods and service market. Use of graphs is
indispensable.
a) Stable equilibrium (5 marks)
b) Unstable equilibrium (5 marks)
Question 2 (10 marks)
For each of the following pricing policies, identify a sector or sub-sector in Cameroon that strongly
requires such a policy. Explain your choice and provide three (3) consequences of each policy
intervention.
a) Minimum price policy (5 marks)
b) Maximum price policy (5 marks)
Question 3 (20 marks)
Supposed we are given two goods, apples (A ) and bananas (B ), in our consumption basket. The
cardinalist economists consider that at equilibrium:
MU
A
=
MU
B
P
A
P
B
a) What economic meaning can you give to this mathematical expression? (3 marks)
b) What will happen if MU
A
>
MU
B
How will the above equilibrium be re-established? (5 marks)
P
A
P
B
A consumer in Bambili likes to eat both apples and bananas. At the local store, each apple costs 20 francs
and each banana cost 25 francs. His utility function for A and B is given Uy
U(A, B) = 4 AB where MU
A
= 4 B and MU
B
= 4 A. Suppose he has 400 to spend on apples and
THE UNIVERSITY OF BAMENDA
HIGHER INSTITUTE OF COMMERCE AND MANAGEMENT (HICM) DEPARTMENT OF MANAGEMENT
Second Semester CA Examination: 2017/2018 Course-ECNC 101: Principle of Microeconomics Credit Value: 4
Course Lecturers: Dr. NDAMSA Dickson and Mr Kifem F.
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bananas, how many of each should he buy to maximize his satisfaction? (12 marks)
Good luck
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