BBS First year
Microeconomics For Business
Subject Code - MGT207
Model Question
Set - B
Time: 3hrs

Group A

Brief Answer Questions (Attempt all Questions) [10x2=20]

1. Define marginal rate of substitution.

2. List out the factors that cause rightward shift in supply curve.

4. Why does TR increase at a decreasing rate when MR decreases?

5. Let, CA= RS 150000, CB=RS 100000, CA+B= RS 200000. Compute the degree of economies of scope.

6. Microeconomics is also called Price Theory. Why?

7. Identify the factors that create interest rate differentials.

8. Write any four characteristics of oligopoly.

9. Let, eP(Newspapers)= -0.6 and eP(Mobile sets)= -1.8. In order to increase the TR, to which commodity would you suggest to increase price?

10. Demand is a flow concept. Why?

Group B

Descriptive Answer Questions (Attempt any five) [5x10 = 50]

11. What is business economics? Explain its scope. [2+8]

12. Explain the modern theory of rent. [10]

13. Explain the concept of cost-plus pricing with suitable examples. [10]

14. Consider the following demand and supply schedules.

Consider the following demand and supply schedules.
a. Derive linear supply function. Also compute elasticity of supply at equilibrium price.
b. Compute price elasticity of demand at movement from B to D and D to B by percentage method.
c. Compute price elasticity of demand at movement at midway between B and D and D and B by arc method.
d. State the relationship between price elasticity of demand and total revenue. [2+3+3+2]

a. Explain the concept of price ceiling and price floor.
b. Let demand function Qd = 300 – 5P, supply function, Qs = -150 - 5P. Determine consumer’s surplus, producer’s surplus and total surplus. [4+6]

a. Differentiate accounting cost and economic cost with suitable examples.
b. Let, cost function, C = 600+20Q-3Q2+O.1Q3
i. Derive TC, AVC, AC and MC functions
ii. Determine the value of TC, AVC, AC and MC at output (Q) =20. [4+ (4+2)]

Group C

Analytical Answer Questions (Any Two) (2x15=30)

17. How does firm maximize output by investing fixed total cost outlay at given prices on two inputs? What will be the effect on output when total cost outlay increases? [8+7]

18. What is monopoly? How are the price and the output determined under it? [2+ (8+5)]

a. Derive income consumption curve for normal goods.
b. Let budget = Rs 10000, Px = Rs 200, Py = Rs 100,
(i) Derive budget constraint and identify the consumer’s equilibrium under equal allocation of budget.
(ii) Let, price of X good falls to Rs 100, Derive new budget constraint. Also identify the new equilibrium when he allocates Rs 4000 on X goods and Rs 6000 on Y goods.
(iii) Derive price demand curve for X good. [5+ (4+4+2)]


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