Final Term Examination

Post Foundation Programme

Name Course Code BBSSM1103
Group Academic Year 2016-2017 (December)
Date Title of the Course Economic Issues
Duration 2 Hours Total Marks 50

Instructions Evaluation

Q.No. Marks Score

a) Use black/blue ink or ballpoint pen. Writing
Part - A 15
with pencil is not allowed.
b) Answer all questions in the space provided. Part - B 20
c) Mobile phones are to be switched off before
Part - C 15
entering the examination hall.
d) Please make sure to take away your Total 50
belongings while leaving the examination
hall. Re-entry into the hall is prohibited
during the duration of the exam and allowed
only when the exam time is finished.

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Part-A (15 Marks)

1. An Enquiry into the Nature and Causes of Wealth of Nations” is the book of
economist—
a) Adam Smith
b) Marshall
c) Robbins
d) None of above

2. Utility means—
a) Power to satisfy a want
b) Usefulness
c) Willingness of a person
d) Harmfulness

3. -------------represents the tabular form of quantity demanded of a particular product

during a given period of time
a) Law of demand
b) Demand Curve
c) Demand schedule
d) Cross demand
4. What would be the value of elasticity of demand, if the demand for the good is
perfectly inelastic?
a) 0
b) 1
c) infinity
d) less than Zero
5. The responsiveness of demand to the change in income is known as
a) Price elasticity of demand
b) cross elasticity of demand
c) income elasticity of demand
d) none of these

6. The market supply curve shows

a) the effect on market demand of a change in the supply of a good or service
b) the quantity of a good that firms would offer for sale at different prices
c) the quantity of a good that consumers would be willing to buy at different
prices
d) All of the above are correct

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 7. When total utility becomes maximum, then marginal utility will be—
a) Minimum
b) Average
c) Zero
d) Negative

8. Which utility approach suggests that utility can be measured and quantified?
a) Ordinal
b) Cardinal
c) Both A &B
d) Diminishing Marginal Utility
9. ----------------------- of a commodity is the additional utility derived by a consumer,
by consuming one more unit of that commodity.
a) Marginal utility
b) Total utility
c) Average utility
d) maximum utility
10. Which shows various combinations of two products that give same amount of
satisfaction?
a) Iso-cost curve.
b) Marginal utility curve.
c) Iso-quant.
d) Indifference curve.

State True or False

1. Managerial economics involves the application of economic theory and decision
science. True/False.
2. Market equilibrium refers to a situation in which market price is at a level where
there is neither a shortage nor a surplus. True/False
3. Supply is the quantity of a good sellers wish to sell each time the market opens
True /False
4. A change in price can cause a shift of a demand curve True / False
5. Fixed cost + Variable cost= Total cost True/False

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Part-B (15 Points)

Answer any three (3) of the following

1. Outline the variable that influence demand.
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2. Write a short note on indifference curve with the help of a graph.
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3. Mention the types of supply elasticity.

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 4. Define Isoquant with the help of a graph.
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Part-C (20 Points)

Answer any two (2) of the following
1. Mr. Perfect has 24 RO with him to spend on two goods X and Y. Further, suppose
price of each unit of X is 2RO and that of Y is 3 RO. and his marginal utility
schedule is given as follows:
a) How should Mr. Perfect allocate his 24 RO between X and Y so as to achieve
maximum utility.
Units (Q) MUx MUx/Px MUy MUy/Py
1 40 48
2 36 42
3 32 36
4 28 30
5 24 24
6 20 18
7 12 12

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 b) Suppose the price of Y is changed to 2 RO. By comparing the marginal utility per
RO of his current purchase of X and Y, what is new consumer equilibrium of
Mr. Perfect.
Units (Q) MUx MUx/Px MUy MUy/Py
1 40 48
2 36 42
3 32 36
4 28 30
5 24 24
6 20 18
7 12 12

Question:2- Solve the following market equilibrium equation

The demand function is Qd = 90-2P

The Supply function is Qs = 20+5P
a) What is equilibrium price and quantity? Calculate through mathematical approach

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b) Find the quantity demand and quantity supply
Price of Quantity Quantity
goods demanded supplied
0

10

12

14

c) Show the market equilibrium in graphical approach.

d) Due to increase in income the demand changed to Qd = 60-3P. No change in

supply function. Find the new equilibrium in mathematical approach?

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Question -3
Complete the table for various cost

Average Average Average

Qua Fixed Variable Total Marginal
fixed variable total
ntity cost cost cost cost
cost cost cost
0 ₹ 6.00 ₹ 0.00 ₹6.00 -- -- -- --

1 ₹ 6.00 ₹ 0.30 ₹ ₹ ₹ ₹ ₹

2 ₹ 6.00 ₹0.80 ₹ ₹ ₹ ₹ ₹

3 ₹ 6.00 ₹1.50 ₹ ₹ ₹ ₹ ₹

4 ₹ 6.00 ₹2.40 ₹ ₹ ₹ ₹ ₹

5 ₹ 6.00 ₹3.50 ₹ ₹ ₹ ₹ ₹

6 ₹ 6.00 ₹4.80 ₹ ₹ ₹ ₹ ₹

7 ₹ 6.00 ₹6.30 ₹ ₹ ₹ ₹ ₹

8 ₹ 6.00 ₹8.00 ₹ ₹ ₹ ₹ ₹

9 ₹ 6.00 ₹9.90 ₹ ₹ ₹ ₹ ₹

10 ₹ 6.00 ₹12.00 ₹ ₹ ₹ ₹ ₹