Introductory Microeconomics-BBA| Question Paper 2007| Semester: Spring

Introductory Microeconomics
BBA Second Semester
Old Question Paper
Year: 2007 | Semester : Spring
Pokhara University
Management Notes

Exam 2007 Spring

1. a. What is microeconomics? Explain the positive and normative aspects of economics. [8]
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. [7]
b. Calculate the price elasticity of demand at price Rs 100 for the following demand curve.
P=300-Q/2
Interpret the result. [8]

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: [8]
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 indifference curve? Explain the properties indifference curves. [7]

4. a. What do you mean by producers equilibrium? How can the producer maximize the production at the given total cost and input prices. [8]
b. Compute AVC, AFC ,AC and MC with the help of following data: [7]

Output (units)	TVC	TFC
1	100	100
2	210	100
3	330	100
4	460	100
5	660	100

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 perfectly competitive market. [15]

6. Define monopolistically competitive market with examples. Explain the short-run and long equilibrium of the firm in monopolistically competitive market. [15]
OR
Under what conditions will a firm shutdown temporarily and under what conditions will a firm exit a market permanently? Explain. [15]

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