a)Given that Njeri has Kshs. 100 and plans to buy two goods X and Y. the price for X and Y being Kshs. 20 and Kshs. 10 respectively.

i.Construct her budget constraint(4 marks)

ii.Show the possible combinations of X and Y that meet the budget constraint given

(6 marks)

X

0

1

2

3

4

5

Y

b)Kenya power lighting company (KPLC) is the main supplier of electricity in the country. Both commercial and domestic users purchase this product. The company charges different prices or tariffs to these two users.

a)Which group is likely to be charged more and why?(2 marks)

b)Explain reasons that KPLC acquired the monopoly status(8 marks)

With the help of well-labeled diagrams explain why the perfect market does not have excess profits nor losses in the long run