Introductory Microeconomics – Old Question Paper 2007 | Semester: Fall

questionIntroductory Microeconomics
Old Question Paper
Year: 2007 | Semester: Fall
Pokhara University

Exam 2007 Fall

1. a. “Whole economic analysis rests on the problem of scarcity and choice”. Explain. [7]
b. What is law demand? Why demand curve slopes downward from left to the right? [8]

2. a. A market consists of three consumer A, B and C whose individual demand equations are as follows:
A: P=35-0.50QA
B: P=50-0.25QB
C: P=40-2.00Qc

The market supply equation is given by Qs=40+35P. [8]
i. Determine the market equilibrium price and quantity.
ii. At the equilibrium price, determine the price elasticity of demand and interpret the result.

b. “According to equi-marginal utility, the consumer is in equilibrium when the ratios of marginal utility to price for all goods are equal”. Explain. [7]

3. a. How price elasticity of demand is measured using total expenditure method or total revenue method? On the basis of the following table, if price of each of these commodities is decreased, which ones will experience an increase in revenue and why? [7]

Seller of commodityCottonRefrigeratorsNewspapersTV sets
Price Elasticity0.121.400.102.40

b. Least cost combination of factors requires that the ratio of marginal products at two inputs must equal to the ratio of their prices”. Verify this statement with the help of isoquant and iso-cost line. [8]

4. a. Define average cost and marginal cost. Elucidate the relationship between the average and marginal cost curves. [8]
b.The consumer is in equilibrium when ratios of marginal utility to price for all goods are equal” Explain. [7]

5. What are the different factors contributing for the existence if a monopoly market? How a monopolist attains its equilibrium in short run? [15]

6. a. ‘Rent is a surplus of current earnings over transfer earnings’ Explain. [8]
b. What is wage? Explain Marginal Productivity Theory of Wage. [7]

7. Write short notes on (Any Two) [2×5]

a. Factor Pricing
b. Firm Vs Industry
c. Positive and normative aspects of economics.

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