Introductory Microeconomics – Old Question Paper 2009 | Semester: Fall

questionIntroductory Microeconomics
Old Question Paper
Year: 2009 | Semester: Fall
Pokhara University

Exam 2009 Fall

1. a. What is market equilibrium? Show how equilibrium price is determined in a free market economy? [7]
b. What are the problems of scarcity that the society faces? In what ways does specialization reduce the problem at scarcity? [8]

2. a. Differentiate between Cardinal Utility Analysis and Ordinal Utility Analysis. How does a consumer get equilibrium under Cardinal Utility Analysis. [7]
b. State the law of demand. Why does it slope downward from left to right? Does it hold true for giffen goods? Why? [8]

3. a. Suppose that your demand schedule for compact discuss is as follows: [8]

Price Quantity demanded

(income =$ 10,000)

Quantity demanded

(income =$ 12,000)

$ 8 40 50
10 32 45
12 24 30
14 16 20
16 8 12

i. Calculate your price elasticity of demand as the price of compact discs increases from $8 to $10 if your income is $10,000.
ii. Calculate your income elasticity of demand as your income increases from $10,000 to $12,000 if the price is $14.

b. What is meant by consumer’s equilibrium? Show the consumer’s equilibrium with the help of indifference curve approach. [7]

4. a. Explain the production theory with two variable inputs. [8]
b. From the following cost function calculate TFC, AFC, TVC and AVC. [7]

Output 0 1 2 3 4 5 6
TC 120 180 200 210 225 260 330

5. A firm has demand function P=4-2q and cost function C=q^2+2q.Find, [15]
a. Equilibrium price that maximum profit
b. AC, MC, AR and MR at equilibrium price and quantity.

6. a. Explain the typical shape of short-run average fixed ,average variable, average total and marginal cost curves. [7]
Explain the derivation of long-run average cost curve. [7]
b. What is factor price? Explain the determination of factor price in an imperfectly competitive market in long run. [8]

7. Write short notes on (Any Two) [2×5]
a. Isocost curve
b. Nature of Average Revenue and Marginal Revenue Curves
c. Shift in Demand Curve

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