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IMI611S-INTERMEDIATE MICROECONOMICS-2ND OPP-JULY 2022 |
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n Am I BI A u n IVE RS ITY
OF SCIEnCE Ano TECHn OLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATIONS: BACHELOR OF ECONOMICS, BACHELOR OF ACCOUNTING GENERAL AND
BACHELOR OF ACCOUNTING (CHARTERED)
QUALIFICATION CODE: O7BEC0,
07BOAC AND 07 BACC
LEVEL: 7
COURSE CODE: IMl611S
SESSION: JUNE 2022
DURATION: 3 HOURS
COURSE NAME: INTERMEDIATE MICROECONIMICS
PAPER: THEORY
MARKS: 100
SECOND OPPORTUNITY EXAMINATION
EXAMINER(S} Mr Pinehas Nangula
Mr Eslon Ngeendepi
QUESTION PAPER
MODERATOR: Mrs Ndeshi Shitenga
INSTRUCTIONS
1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number the answers clearly.
PERMISSIBLE MATERIALS
1. Pens/pencils/erasers
2. Calculator
3. Ruler
THIS QUESTION PAPER CONSISTS OF 3 PAGES (Including this front page)
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QUESTION1
[10 Marks]
State whether the following statements are either positive or normative:
i. The Namibian inflation rate is too high.
ii. Dr Hage Geingob is the president of Namibia.
iii. The government should enforce minimum prices for beers sold in Supermarkets
in a bid to control alcohol consumption.
iv. Bank of Namibia hike the Repo Rate by 0.25 basis points on the 13 April 2022.
v. The government should increase the minimum wage to N$20 per hour to
reduce poverty.
QUESTION2
[20 Marks]
a) Suppose that the demand function for lamb in Namibia is Q = 63 - llp + 7pb + 3pc + 2Y,
where Q is the quantity in million kilograms (kg) of lamb per year, p is the dollar price
per kg (all prices cited are in Namibian dollars), pb is the price of beef per kg, pc is the
price of chicken per kg, and Y is annual per capita income in thousands of Namibia
dollars. What is the demand curve if we hold pb, pc, and Yat their typical values during
the period studied: pb = 19, pc= 6, and Y= 78?
(8)
b) Using the demand function for lamb from Question 2 (a), show how the quantity
demanded at a given price changes as annual per capita income, Y, increases by N$200.
(6)
c) Suppose that the inverse demand function for movies is p = 120 - Q:1 for college
students and p = 120 - 2Q2 for other town residents. What is the town's total demand
function?
(6)
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QUESTION 3
[45 Marks]
i. The coconut oil demand function {Buschena and Perloff, 1991) is
+ + Q = 1200. - 9,Sp 16,2pp 0.2YJ Q is the quantity of coconut oil demanded in
thousands of metric tons per year, pis the price of coconut oil in cents per pound, pp is
the price of palm oil in cents per pound, and Y is the income of consumers. Assume that
p is initially 45C per N$, pp is 31C N$, and Q is 1,275 thousand metric tons per year.
Calculate the price and cross-price elasticities of demand for coconut oil.
(10)
ii. Given a linear supply function is Q = g + hp. Derive a formula for the elasticity of supply
in terms of p (and not Q). Now write a formula entirely in terms of Q.
{10)
iii. Outline the properties of an indifference curve.
(8)
iv. Define Marginal rate of technical substitution.
(2)
v. Eslon's utility function is U{B, Z) =ABczzb .What is his marginal utility of 8? What is his
marginal utility of Z? What is his marginal rate of substitution between Band Z? {10)
vi. Michelle has a utility function U{B, Z) = ABczzb, where A, a, and are constants, Bis
burritos, and Z is pizzas. If the price of burritos, P8 , is N$2 and the price of pizzas, Pz, is
N$1, and Y is $100, what is Michelle's budget line and the marginal rate of
transformation? (Note: burritos are on the vertical axis).
(5)
QUESTION 4
Give the formulas for AFC, MC, AVC, and AC if the cost function is:
a)
C = 10 + q 2•
b)
C=10+10q-4q 2 +q 3.
[25 Marks]
TOTAL= 100 MARKS
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