BBA First Year Second Semester Final Examination -2011

Micro Economics (1204)

Time-3 Hours Full Mark-70

[N.B- The Figures in the right margin indicate full Marks.]

Part A- Short Questions

(Answer any five Questions)
Marks- 5X5 =25

1. What are the fundamental economic problems? How these problems can be solved? 5
2. Define opportunity cost and economic of scale. 5
3. Define market. What are the different features of a perfectly competitive market? 5
4. With the help of diagrams explain the elasticity of supply. 5
5. What do you mean by market equilibrium? How would you determine equilibrium price?
5
6. Briefly discuss the marginal productivity theory of wages with criticism. 5
7. Critically discuss the Recardian theory of Rent. 5

Part B--- Broad Questions

(Answer any three questions)

Mark15x3=45
8. (a) suppose a market consist of three consumers, A, B and C whose inverse demand
functions are given below:
(A) : P= 35-0.5QA
(B) : P= 50-0.0.25QB
(C) : p=40-200QC
(i) Fine out the market demand function for the commodity. 4
(ii) If the market supply function is given by Qs =40+3.5P, Determine the equilibrium price
and quantity. 6
(b) Distinguish between a change in demand and a change in quantity demanded,
mentioning the cause of each. 5

9. (a) Write down the law of demand and law of supply. How is the market equilibrium
determined? Show using the demand-supply framework. 6
(b) Draw a demand curve from price Consumption Curve (PCC) which represents
optimal combinations of two goods. 6
(c) Define Engel Curve. 3

10.(a) Explain the law of diminishing marginal returns. 5

 (b) Explain least cost factor combination or optimum factor combination of production inputs.
5
(c) Explain why in long un all costs are variable. Explain the conditions for the equilibrium of
a firm. 5

11.(a)What are differences between perfect competition and monopolistic competition? 5

(b) Marginal revenue curve of a firm cannot be above its average revenue curve.
--- Explain. 4
(c) Why does average curve and marginal revenue curve fall on the same line? 3
(d) Why do AC curve and MC curve tend to be ``U shaped? 3

12.(a) Explain the concept of production function. Why is it useful in analysis of a firms
behavior? 5
(b) Consider following data on output and inputs. What type of returns to scale does it
represent and why?
K L Q
5 8 3
16 6 12
20 32 12
40 64 24

Where, K denotes units of capital, L denote units of labor and Q denotes output produced.
6
(c) Draw the iso-quants of fixed proportions production function. 4