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Old Question Paper
Year: 2014 | Semester: Fall
Exam 2014 Fall
1. a. “Scarcity is the mother of all economics problem”. Explain in the light of this statement, the causes of the origin of economic problems in an economy. 
b. Explain about the law of demand. Why demand cure slopes downward to the right? 
2. a. Let individual demand function Qdx=12-2Px and market supply function Qsx=20Px . If there are 10 individuals customers in the market for the commodity X, find: 
i. Market demand function
ii. Market demand and market supply schedule.
iii. Derive market demand curve and market supply cure
iv. Obtain Equilibrium price and quantity mathematically
b. A publishing company plans to publish a book .From the sales data of other publishers of similar books, it works out the demand function for the book as Qd=500-5p. Find out 
i. Point elasticity of demand at price Rs. 20, and
ii. Arc elasticity for a fall in price from Rs 25 to Rs. 20
3. a. Separate the price effect into income effect and substitution effect for a normal good when its price falls. [2+5]
b. Give reason for the following (use diagram to support your answers): [4+4]
i. Indifference curves are convex to the origin.
ii. Two indifference curves cannot interest each other.
4. a. State and explain about the law of variable proportions. 
b. Explain the methods of finding cut the least cost combination of inputs in the production theory. 
5. a. The following table shows the average cost and average revenue (price) for a firm at each level of output. [6+2+3]
i. Construct a table to show TC, MC, TR and MR
ii. Using TC-TR approach, find the profit maximizing output level.
iii. What type of market does it indicate? Why?
b. Why are short run cost curves (SAC, SMC and SAVC) U-shaped? 
6. a. Explain price and output determination under perfectly competitive market in the long run. 
b. Explain the determination of factor price in an imperfectly competitive market.
7. Write short notes on any two: [2×5=10]
a. Marginal Rate of Substitution.
b. Feature of monopolistic competition market
c. Opportunity cost.