Economics: Revision Questions

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Revision questions

1.Define the term “consumer rationality” and outline the conditions that must be fulfilled for consumer rationality 2.Using indifference curves derive the demand curve for a normal good. 3. With the help of a diagram distinguish between the income effect and substitution effect of change in the price of a normal good. 4.Using an illustration, explain the concept of market equilibrium in economics 5. 6.Define the term “opportunity cost”

7.
8.Explain the factors that influence cost beheviour in a firm 9.Illustrate and briefly explain the relationship between marginal cost (MC) and average cost (AC) curves of a firm 10.The total cost in thousands of shillings (TC) of producing Q units of a given product is given by the following function: TC = 1,000 + 2Q2-12Q

Required:
(i) The total fixed costs.
(ii)The output level that will minimize the marginal cost.
(iii)The marginal cost when the level of output is 5000 units. 11.Economics is both a science and an art. Explain 12.Distinguish between the following

(i)Consumption curve and Engel curves (ii)Cardinal approach and marginal approach to measuring utility 13.Briefly explain the limitations of the cardinal approach in measuring utility 14.Define the term “cross elasticity of...
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