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Principles of Micro Economics Past Papers

Paper# 1

[OBJECTIVE]

Subject: Principles of Micro Economics

Time Allowed: 15 Min

Maximum Marks: 10

NOTE: Attempt this Paper on this Question Sheet only. Please encircle the correct option. Division of marks is given in front of each question. This Paper will be collected back after expiry of time limit mentioned above.

 

Part-I Encircle the right answer, cutting and overwriting is not allowed. (1×10=10)

1. By nature, Economic Laws are:

Exact – b. Permanent

Conditional d. Quantitative

2. The characteristic of a commodity to satisfy a human want is termed 48:

Utility b. Value

Usefulness d. Wealth

3. The slope of Marginal Utility curve is

Negative b. Positive

Zero d. infinity

4. In case of rise in demand; the demand curve shifts:

Right b. Left

¢. Both Sides                                      d. Remains the same.

5. If Income Elasticity is positive, then the nature of Commodity is:

Inferior b. Giffen

Superior d. None of these

6. The sole cause of Expansion and Contraction in Quantity Supply is:+ .-

Price b. Population

Taxes d. Technology

7. If the Elasticity-of Supply is more elastic then the Supply Curve is

Flatter b. Steeper

Horizontal d. Vertical

8. The perishable Goods are usually sold in

International Market b. National Market

¢. Local Market                                d. None of these

9. The Law of Increasing Returns to scale mostly applies to:

Industry b. Agriculture

Trade d. Construction

10. The necessary condition of firm’s equilibrium is:

MC=MR b. MC>P

¢. MC> MR                                         d. MC=AC

 

 

[SUBJECTIVE]

Subject: Principles of Micro Economics

Time Allowed: 2 Hrs. 45 Min

Maximum Marks: 50

NOTE: ATTEMPT THIS (SUBJECTIVE) ON THE SEPARATE ANSWER SHEET PROVIDED

 

Part-II Give short answers! (20)

Q#1. Define Marginal Utility?

Q#2. Define Partnership?

Q#3. What is meant by Demand?

Q#4. Define Joint stock Company?

Q#5. Define Marginal Revenue?

 

Part-III Briefly Explain the following questions  (30)

Q#1. Define and explain law of Diminishing Marginal Utility with the help of schedule and diagram.

Q#2. Explain Market equilibrium with the help of table and diagram?

Q#3. Explain the normal-profit situation of a perfect competitive firm in short run?

 

 

Paper# 2

[OBJECTIVE]

Subject: Principles of Micro Economics

Time Allowed: 15 Min

Maximum Marks: 10

NOTE: Attempt this Paper on this Question Sheet only. Please encircle the correct option. Division of marks is given in front of each question. This Paper will be collected back after expiry of time limit mentioned above.

 

Part-I Encircle the right answer, cutting and overwriting is not allowed. (1×10=10)

1. Curve tracing the utility maximizing combination of two goods as the price of one changes is called

a) Price consumption curve b) Income consumption curve

c) Demand curve d) Indifference curve

2. ______ relates quantity of good consumed to income.

a) Engel curve b) Supply curve

c) Demand curve d) None of the above

______ is the change in consumption of a good associated with a change in its price, with level of utility held constant.

a) Income effect b) Price effect.

c) Substitution effect d) None of the above

______ is the good whose demand curve slopes upwards.

a) Normal b) Giffen

c) Interior d) None of the above

5. ______ shows the highest output a firm can produce for every specified combination of inputs.

a) Demand function b) Supply function

c) Production function d) Cost function

6. ______ is the output per unit of the particular input.

a) Marginal product b) Total product

c) Average product d) None of the above

7. Marginal rate of technical substitution (MRTS) as we move down along an isoquant.

a) Increases b) Decreases

c) Remains same d) None of the above

8. In case of fixed proportions production function, isoquants are :

a) Vertical b) Horizontal

c) L-shaped d) Positively sloped

9. The situation in which output more than doubles when all inputs are doubled is called as i.

a) Constant returns to scale b) Increasing returns to scale

¢) Decreasing returns to scale                                    d) None of the above

10. Actual expenses plus depreciation charges for capital equipment is

a) Economic cost b) Opportunity cost

c) Accounting cost d) None of the above

 

 

SUBJECTIVE]

Subject: Principles of Micro Economics

Time Allowed: 2 Hrs. 45 Min

Maximum Marks: 50

NOTE: ATTEMPT THIS (SUBJECTIVE) ON THE SEPARATE ANSWER SHEET PROVIDED

 

Part-II Give short answers! (20)

Q#1. State the Law of Diminishing Marginal Utility. Briefly explain with an example.

Q#2. Explain the relationship between total utility and marginal utility of a commodity using diagram.

Q#3. What is an indifference curve? Explain why two indifference curves cannot intersect.

Q#4. What is Marginal Rate of Substitution (MRS)? What happens to the MRS as you move along a convex indifference curve?

Part-III Give brief answers to the following questions (30)

Q#1. Suppose a firm under monopoly faces the following cost function: C= 100+ Q2

The demand curve is given by: P=80-Q

a) What is the level of equilibrium output and price?

b) Calculate the firm’s profits, total cost, marginal cost and average variable cost.

c) Are the profits really maximum?

(Hint: Check the second order condition for profit maximization i.e. Slope of MR < slope of MC)

Q#2. Explain the law of variable proportions. (10)

Q#3. Use demand and Supply analysis to illustrate how each of the following events would affect the price of butter and the quantity of butter bought and sold.

a) An increase in the price of milk.

b) A decrease in income of the consumer.

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