Old Question Paper Year: 2007 | Semester: Spring
Exam 2007 Spring
1. a. What is microeconomics? Explain the positive and normative aspects of economics. 
b. Why does a demand curve slope downwards to the right?
2. a. What is market equilibrium? Show how equilibrium price is determined in a free market economy. 
b. Calculate the price elasticity of demand at price Rs 100 for the following demand curve.
Interpret the result. 
3. a. Suppose there are 1000 identical individuals in the market for commodity X, each with a demand function given by Qdx=12-2Px and 100 identical producers of with a supply function given by Qsx=20Px. Then find: 
i. The market demand function (QDx) and the market supply function (QSx) for commodity X
ii. The equilibrium price and the equilibrium quantity.
b. What is the indifference curve? Explain the properties of indifference curves. 
4. a. What do you mean by producers’ equilibrium? How can the producer maximize the production at the given total cost and input prices. 
b. Compute AVC, AFC, AC and MC with the help of the following data: 
In which, AVC=Average Variable Cost, AFC=Average Fixed Cost ,AC =Average Cost ,MC= Marginal cost TVC=Total variable Cost ,TFC=Total Fixed cost
5. What is marginal revenue? Show the relationship between marginal revenue and marginal cost curve in a perfectly competitive market. 
6. Define monopolistically competitive market with examples. Explain the short-run and long equilibrium of the firm in monopolistically competitive market. 
Under what conditions will a firm shutdown temporarily and under what conditions will a firm exit a market permanently? Explain. 
7. Write short notes on (Any Two) [2×5]
a. Accounting and economic cost
b. Marginal Rate of Substitutions MRTS)
c. Inferior and Giffen goods
d. Input Pricing