Introductory Microeconomics-BBA | Old Question Paper 2008| Semester – Spring

questionIntroductory Microeconomics
BBA Second Semester
Old Question Paper
Year: 2008 | Semester : Spring
Pokhara University
Management Notes

Exam 2008 Spring

1. a. Scarcity is not only the problem but also the beginning of economic activities. Explain
b. However, demand and supply keep different relations with price but both are equally required for better economic stability’. Explain it. [7]

2. a. Discuss the total outlay method. [8]
b. How is ordinal approach better than cardinal approach to measure utility? [7]

3. a. Define indifference curve and determine consumer’s equilibrium with the help of ordinal approach. [7]
b. Decompose price effect into income effect and substitution effect with a fall in the price of a
normal good. [7]

4. Explain the law or variable proportions and different stages of production. In which stage of production does a rational producer operate? Why? [15]

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

Output 1 2 3 4 5 6 7 8 9 10
AC ($) 7 5 4 3.25 3 3.10 3.50 4.20 5 6
AR($) 10 9.50 9 8.50 8 7.50 7 6.50 6 5.50

i. Construct a table to show TC, MC, TR and MR. [6]
ii. Using TC-TR approach, find the profit maximizing output level. [2]
iii. What type of market does it indicate? Why? [1+2]

b. Why are short run cost curves (SAC, SMC and SAVC) U-shaped? [4]

6. a. What is wage? How wage is determined in a perfectly competitive factor market. [8]
b. Discuss the loanable theory of interest and justify it as a determinate theory. [7]

7. Write short notes on (Any Two) [2×5]
a. Marginal Rate of Substitution
b. Opportunity cost
c. Characteristics of monopoly market

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