CAT 1 1. Explain the reasons for government intervention in the economy. 2. Distinguish between change in quantity demanded and change in demand. 3. Explain the law of diminishing marginal rate of substitution 4. Explain the equilibrium of the consumer according to indifference curve technique. 5. Giving appropriate examples, explain the term "fixed factors of production" 6. Explain and illustrate the resultant hypothetical total and marginal product curves for an economy with only two factors of production, one of which is fixed. 7. The following table represents a production function of a hypothetical firm in the short-run. Output (units) 0 10 20 WPS Office 30 40 50 60 70 Total cost (sh) 80 150 410 455 560 680 750 920 a) Define marginal cost and give an estimate of the marginal cost of producing the 20th unit of capital. b) Find the average fixed cost and average variable cost when the firm produces 50 units of output. 1