QUESTION ONE [30]

Discuss the consumer equilibrium condition according to utility theory. (10)
Discuss the concept of returns to scale in specific relation to the diagram below: (13)

Differentiate between the market supply of labour curve and the individual
supply of labour curve. (7)

QUESTION TWO [30]

Discuss the nature of the goods produced by firms in the following market structures:

Perfect competition (4)
Monopoly (4)
Monopolistic competition (4)

Explain with the aid of a diagram, the shape of the demand curve for an oligopoly firm. (12)

Explain why perfectly competitive firms only make a normal profit in the long-run. (6)

QUESTION THREE [25]

Discuss the two main tools of fiscal policy and how it can be applied to achieve the macroeconomic objective of economic growth.

QUESTION FOUR [15]

Discuss three (3) main reasons for the downward sloping shape of the aggregate demand curve.

Answers to Above Questions on Economics

Answer 1: 

Consumer equilibrium is defined as a concept that involves consumers achieving maximum satisfaction by way of allocating their budget within different goods and services as per their satisfaction or utility. The utility theory is significant in explaining the concept of consumer equilibrium whereby it states that consumer equilibrium is the point whereby consumers allocate their budget in a way that leads to marginal utility for each amount spent as against the goods or services received.