Introductory Microeconomics
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Old Question Paper
Year: 2006| Semester: Fall
Pokhara University
Exam 2006 Fall
1. a. Explain the factors determining consumer demand. [7]
b. Differentiate between change in demand and change in quantity demanded with appropriate diagrams. [8]
2. a. The following table shows price and income elasticity for vegetables and catering services. For each good, explain whether it is a luxury or a necessity, and whether demand is elastic or inelastic. [8]
| Commodities | Price Elasticity | Income Elasticity |
| Vegetables | 0.17 | 0.87 |
| Catering Services | 2.61 | 1.64 |
b. A good harvest will generally lower the income of farmers.” Justify. [7]
3. a. Distinguish between fixed cost and variable cost. [8]
b. Why is average cost curve U-shaped? [7]
4. a. Explain the meaning of utility. What is the difference between total utility and marginal utility? Explain the law of diminishing marginal utility. [8]
b. With the help of indifference curves, show how price effect is broken up into income an substitution effect. [7]
5. Discuss the concept of short run production function. Explain law of production function with one variable input. [7+8]
6. Where does the optimum level of output for the monopolist occur? Is monopoly price always higher than the price under perfect competition.[7+8]
7. Write short notes on (Any Two): [2×5]
a. Modern Theory of Rent
b. Marginal Revenue
c. Market Equilibrium
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