Principles of Microeconomics (ECNC2101)
Higher Institute of Commerce and Management (HICM)
Semester: First Semester
Level: 200
Year: 2018
THE UNIVERSITY OF BAMENDA
Higher Institute of Commerce and Management
(HICM Level 1)
Examination 2017/2018
Principles of Microeconomics, course code: ECNC 102, Time Allowed:1H
Examiner: Dr NDAMSA / Mr Kifen
Instruction: answer the questions in the sequence they appear
QUESTION 1( 10 MARKS)- 1 Mark each
Write TRUE for the correct statement and FALSE for the wrong one. Do not copy statements.
Economics is an unfinished science because its scope is expanding and embracing other disciplines like
sport, geography, agriculture etc
Normal and luxurious goods can be determined by their cross elasticities.
The government is a bi-sector in a mixed economy system.
The government places a maximum price policy above the market price.
Indifference curves slope downward from left to right because more of one good implies less of the
other good.
When a firm does not produce anything its total costs are made up of variable costs.
Higher isoquants yield higher levels of output to the producer because they represent a higher
combination of one or both factors.
Technology is the only production input that only varies in the long run.
If MUA/PA is greater than MUB/PB then we need to increase the consumption of B in order to get to
equilibrium.
The principle of returns to scale is the economic principle used to explain what happens to production
with one input which can be changed?
Question 2 (10 marks)
The table below displays the prices and the quantities demanded of good 1 and good 2 as well as
Goods X and Y.
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Commodity
Price(CFA francs)
Quantity
Price (CFA franc)
Quantity
Good 1
150
20 units
200
25units
Good 2
100
30 units
150
45 units
Good X
250
10 units
250
25 units
Good Y
200
20 units
150
30 units
a) Calculate the elasticity of the good 1 with respect to the price of good 2. (2 marks)
b) What is the nature of these two goods? Justify using the answer in (a) ( 2 marks)
c) Give an example of such goods ( that is, good 1 and good 2). ( 1mark)
d) Calculate the elasticity of the good X with respect to the price of good Y. (2 marks)
e) What is the nature of good X and good Y?( 2marks)
f) Give an example of such goods ( that is, good X and good Y).( 2marks)
Question 3 ( 8 MARKS)
It is a concept in Economics that tax Incidence or tax burden does not depend on where the revenue is
collected, but on the price elasticity of demand and price elasticity of supply. Explain this statement using
appropriate graphs
Question 4( 7 marks)
a) What does marginal utility diminish as one consumes additional units of normal good? ( 2
marks)
b) Economists believe that indifferent curves should not interest because of they do, the
axioms of transitivity and consistency will be neglected. Justify this statement using
appropriate graph(s) ( 5 marks).
GOOD LUCK.
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