SECTION A (TOTAL: 60 MARKS) INSTRUCTIONS: ANSWER THREE (3) QUESTIONS ONLY. QUESTION 1 a) What is meant by Explicit and Implicit costs? (10 marks) b) How does economic profits differ from Financial Profits? Give some examples. (10 marks) [TOTAL: 20 marks] QUESTION 2 a) Describe price discrimination. Give examples. (10 marks) b) Explain the conditions which make price discrimination effective. (10 marks) [TOTAL: 20 marks] QUESTION 3 A firm has the following revenue and cost functions: TR = 100 Q - 4Q2 TC = 300 +40 Q + 2Q2 Determine the level of output at which the firm maximizes its total profit. [20 marks] QUESTION 4 Under Perfect Competition, firms only make normal profit in the long run. Elaborate. [20 marks] MEC604_MANAGERIAL ECONOMICS Page 2 Question 5 Write short notes on TWO (2) of the following - a) Elasticity of Demand - concept and measurement b) Law of diminishing returns - implications for the short-run cost curve c) Increasing economies of scale - meaning and effect on costs d) Economies of Globalization - nature and examples [20 marks] SECTION B (TOTAL: 40 MARKS) INSTRUCTIONS: ANSWER TWO (2) QUESTIONS ONLY. QUESTION 1 What is meant by the Gross Domestic Product (GDP). How it is measured? [TOTAL: 20 marks] QUESTION 2 Variations in the foreign exchange rate can impact on the profitability of businesses. Explain what measures can be taken by a firm to reduce the foreign exchange risks. [20 marks] QUESTION 3 What is meant by Business Cycle? Identify the fiscal and monetary policies normally taken by Governments to revive economy from slowdown/depression. [20 marks] QUESTION 4 Slowdown in the global economy adversely affected the United States's economy during 2008-2009. What measures were taken by United States to boost its economy? Discuss.