Introductory Microeconomics
BBA Second Semester
Old Question Paper
Year: 2005 | Semester : Fall
Pokhara University
Management Notes

Exam 2005 Fall

1. Explain the role of “Price mechanism” in assuring proper allocation and full utilization of productive resources in a free enterprise economy. [15]

2. a. What is price elasticity of demand? How is it measured at any point on the demand curve? [3+5]
b. The demand for a commodity is given by Q=20,000-300P. The commodity is initially priced at Rs.20 per unit. Compute the price elasticity of demand. If the objective is to increase total revenue, should the price be increased or decreased? Why? [3+4]

3. How do you derive an equilibrium situation in a free market economy? Explain your answer with the help of demand and supply curves. What will be the effect in the equilibrium output and price: [5+5]
a. If government has decided to impose tax to the seller?
b. If government has decided to impose tax to the buyer?

4. a. The short run total cost is TC= 200+5Q-0.04Q²+0.001Q³.If Q=10, find: [2×4]
i. total fixed cost
ii. average variable cost
iii. average fixed cost
iv. marginal cost
b. Why is the long run average cost curve ‘U’ shaped? Is the long run cost curve always ‘U’ shaped? [5+2]

5. Explain the law of variable proportion and indicate the stages of production for fixed factor and variable factor. [15]

OR
Explain the producers equilibrium with the help of isoquants and iso-cost line. [15]
6. Explain the price and output determination under monopoly market structure. [15]

7. Write short notes on (Any two) [2×5]
a. Price Discrimination
b. Concept of diminishing marginal rate of substitution
c. Marginal productivity theory of wages.