Principles of Microeconomics I — DU B.A. (Hons.) Economics Previous Year Question Papers

1. (a) Define individual demand and market demand schedule. The following table shows the quantity demanded of a commodity by two consumers at different prices: (9) Price (2) Consumer A Consumer B (units) (units) Construct the market demand schedule and plot the market demand curve. (b) Define an indifference curve and discuss its main properties. Explain in detail using suitable diagrams. (9) 2. (a) Define consumer surplus. Explain how an increase in the price of a commodity affects consumer surplus. Explain it with the help of a suitable diagram. (9) (b) Define price elasticity of demand. Explain its determinants. Salt is an essential good. What type of price elasticity of demand does it have? Explain the factors responsible for it. (9) (b) How does the marginal cost curve relate to the average variable cost and average total cost curves? Illustrate your answer with a diagram showing their typical shapes and points of intersection. -(9) curve. Illustrate your answer with a suitable diagram. (9) (b) The following table shows the Total Product (TP) corresponding to different units of labour employed: (9) Labour (L) Total Product (TP) Calculate the Average Product (AP) and Marginal Product (MP) of labour. Plot the TP, AP, and MP curves on a diagram. Explain the relationship among TP, AP, and MP on the basis of the diagram. 5. (a) How is short-run equilibrium determined for a firm under perfect competition? Is there any possibility of earning profits or incurring losses in the short-run? Explain the reasons behind profit or loss in the short run. (9) (b) Illustrate and discuss the shapes of indifference curves when the goods are perfect substitutes and perfect complements. Explain the reasons behind each shape and what it indicates about consumer preferences. (9) 6. (a) Explain how a firm and the industry under perfect competition attain equilibrium in the long run. Why does a firm earn only normal profits in the long run? Illustrate your answer with suitable diagrams showing the adjustment process from short-run abnormal profits or losses to long-run equilibrium. (9) (sHun) (sun) let tüe tade ye te tis i2 (6)