QUESTIONS ASKED IN PREVIOUS EXAMINATION FROM MODULE 1

1. A firm Flair Pens Ltd. Supplied 2000 pens at the rate of Rs. 18 per pen to Geeta stationary, Ahmedabad, next month, due to a rise in the price to Rs. 22.50 per pen, the supply of the firm increases to 5250 pens. Find the elasticity of supply of the pens. 2. Draw the demand, marginal revenue and marginal cost carves for a monopolist. Show the profit maximizing level of output & price. 3. Honest Juice Bar has the following cost schedules. Quantity Variable cost Total cost 0 1 2 3 4 5 6 Rs. 0 10 25 45 70 100 135 Rs. 30 40 55 75 100 130 165

Calculate AVC, TC & MC for each quantity, Graph all three curves. What is the relationship between the marginal cost curve and the average total cost

4. What is the difference between a "change in demand" and a "change in quantity demanded"? Graph your answer. Also Explain what factor/s will cause change in demand and what factor/s will cause change in quantity demanded. 5. Explain price elasticity of demand and the income elasticity of demand. Also explain the determinants of the price elasticity of demand. 6. Using Demand-and-supply diagrams show the effect of a fall in production of sugarcane on the price and quantity of sugar during the Diwali months (when demand for sugar increases). 7. The cost of producing DVD players has fallen over the past several years. Lets consider some implications of this fact.

i. Draw a supply-and-demand diagram to show the effect of falling production costs on the price and quantity of DVD players sold. ii. In your diagram, show what happens to consumer surplus and producer surplus. iii. Suppose the supply of DVD players is very elastic. Who benefits most from falling production costs? 8. Several studies have found that the overall demand for automobiles has an elasticity of about 1.3 i. How do you interpret this coefficient? ii. After knowing about these results, a Ford dealer in Ahmedabad cut his price by 10 percent and sold 22 percent more cars. What is the elasticity of demand in this case? Does this mean the estimate of 1.3 is incorrect? Explain. 9. What are the determinants of an individual demand and an individuals supply of a commodity? 10. Define total cost, average total cost and, and marginal cost. How are they related? 11. A demands Schedule for pens of student at ABC school is presented in the following table: Price 6 5 4 3 2 1 0 Quantity 0 20 40 60 80 100 120 Find out the price elasticity of demand when the price changes from (i) Rs. 5/- to Rs. 3/- and (ii) Rs. 3/- to Rs. 5/12. Johns own a painting company with fixed of $200 and the following schedule for variable costs. 7 Quantity 1 2 3 4 5 6 7 of houses Variable 10 20 40 80 160 320 640 cost (i) Calculate average fixed cost, average variable cost and average total cost for each Quantity. 13. The study of economics has many facets and the field is unified by several central ideas regarding decision making of peoples, their interaction and the working of economy as a whole- Explain. 14. What are the variables that can shift the demand curve? Discuss 15. What is price elasticity of demand? Explain in detail .

16. Ink Pens and pencils are substitutes. When the price of an ink pen falls, what happens to the supply, demand, quantity supplied, quantity demanded, and price in the market for pencils. 17. The price of coffee increases from Rs.50/ per Kg. to Rs. 70/per Kg, and as a result the demand for tea increases from 5Kg. to 10kg. What is the cross elasticity of demand of tea for coffee? 18. Prestige restaurant has the following cost schedule. Quantity Variable Cost Total Cost 0 0 1000 10 400 1400 20 700 1700 30 930 1930 40 1100 2100 50 1400 2400 60 1900 2900 70 2500 3500 Calculate the AVC, ATC & MC. Compare the column for Average Total Cost and the column for the Marginal Cost. Explain the relationship. 19. Discuss three principles of economics concern the working of economy as a whole. 20. What are the Determinants of Supply?

21. Explain the shift in the demand curve. List and explain the most important variables that can shift the demand curve. 22. Define & explain the income elasticity of demand and the cross price elasticity of demand with suitable example 23. How and why does a firms average-total-cost curve differ in the short run and in the long run? Explain economies of scale and diseconomies of scale 24. Draw the Marginal Cost and Average Total Cost Curves for a typical firm. Explain why the curves have the shapes that they do and why they cross where they do.