Pokhara University || Fall,2014 || Introductory Microeconomics || BBA\BCIS

This is the question set along with answers of Introductory Microeconomics   – Fall, 2014, which was taken by the Pokhara University.

POKHARA UNIVERSITY – Introductory Microeconomics, Fall 2014

Level: Bachelor                                               Semester: Fall                          Year:2014

Programme: BBA/BBA-BI/BCIS/BHCM/BBA-TT                                             Full Marks: 100

Course: Introductory Microeconomics, Fall 2014                                                Pass Marks: 45

Time: 3 hrs

Section “A”

Very Short Answer Questions

Attempt all questions.

1.(a) “Scarcity is the mother of all economics problem.” Explain in the light of this statement the causes of the origin of economic problems in economics.  (b)Explain the law of demand. Why demand curve slopes downward to the right?

2.(a) Let individual demand function Q_dx=12-2P_x and market supply function Q_sx=20P. If there are 10 individual customers in the market for commodity X, find:

• Market demand function
• Market demand schedule and market supply schedule
• Derive a market demand curve and market supply curve
• Obtain Equilibrium price and quantity mathematically

2.(b) A publishing company plans to publish a book. From the sales data of other publishers of similar books, it works out the demand function for the book as Q_d=500-5p. Find out:

• Point elasticity of demand at price Rs. 20, and
• Arc elasticity for a fall in price from Rs. 25 to 20.

3.(a) Separate the price effect into income effect and substitution effect for a normal good when its price falls.

3.(b) Give a reason for the following (use diagram to support your answer):

• Indifference curves are convex to the origin.
• Two indifference curves cannot intersect with each other.

4.(a) State and explain the law of variable proportions.

4.(b) Explain the methods for finding out the least condition of inputs in the production theory.

5.(a) The following table shows the average costs and average revenue(price) for a firm at each level of output.

 

 

Outputs	1	2	3	4	5	6	7	8	9	10	2	3	4	5	6	7	8	9	10
AC($)	7	5	4	3.25	3	3.1	3.5	4.2	5	6	5	4	3.25	3	3.1	3.5	4.2	5	6
AR($)	10	9.5	9	8.5	8	7.5	7	6.5	6	5.5	9.5	9	8.5	8	7.5	7	6.5	6	5.50

• Construct a table to show TC, MC, TR, and MR.
• Using the TC-TR approach, find the profit-maximizing output level.
• What type of market does it indicate? Why?

5.(b) Why are short run cost curves (SAC, SMC, and SAVC) U-shaped?

6.(a) Explain price and output determination under a perfectly competitive market in the long run.

6.(b) Explain the determination of the factor price in an imperfectly competitive market.

7.(a) Write short notes on any two.

• Marginal Rate of Substitution
• Feature of a monopolistic competitive market
• Opportunity cost

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