[This question paper contains 6 printed pages.] Sr.No. of Question Paper : 6001 G Your Roll No... Unique Paper Code : 227101 Name of the Paper : Introductory Microeconomics Name of the Course: B.A. (H) Economies Semester ean Duration : 3 Hours Maximum Marks : 75 Instructions for Candidates 1. Write your Roll No..on the top immediately on receipt of this question paper. Question No. 1 is compulsory. Attempt any four questions out of question 2 to 7. A eR Answers may be written either in English or in Hindi; but the same medium should be used throughout the paper. pal & fay és Lowe wa & fet a aw fee ay Pulte ear we are aT ferfee 1 2 we den 1 afari 31 3 WT 237A RT 4 we A oe Afi 4 ART Te SAH oT AA A TE eT Are, Aa we Sey a TE Ea & ett ae 1, Answer any five parts : x5) (@ Do you agree that for a monopoly firm, price is equal to its marginal revenue ? Explain why or why not. (i) ‘When an increase in the price of one good causes the demand for another g004 to fall, then both goods are substitute for each other.’ Is this statement true or false ? Explain. PLO,6001 2 (ii) Explain why economists usually oppose price controls. (iv) Why do not two indifference curves intersect each other ? (v) “A tax that has no deadweight loss cannot raise any revenue for the government.” Do you agree or not ? Explain why or why not. (vi) Explain the relationship between the slope of a demand curve and its price elasticity. farét dir an get afar: (i) Far ate Fa are Baer F far Varad wt a Sat Gad Sia se SB TTT Ba Saat at wit eT? oe yar ag aA ans HOA art gfe S arr ge wg AA Hi H fear Ba 2 tt Shi aq wfteata agd 31" we wer ae 2 ae gee? RET aifary 1 aren wifare a saat ackerest aire Ratan oar fda ea aa S ? ) (iv) @ sraftens ame ua eat at aa El Ie wea ? (vy) “ver ae fora @ aft ae ent ar a ae want Tora st SereT AA a Bera 1” AT Ba ae A Tem S a ET ? ae ar at et? i) AT aw Rare va eal ahaa cts A weer FA eae wi 2. (i) Why does inefficiency occur in an economy when property rights are either ill defined or are restricted ? Explain using examples. 6) i) Explain using diagrams, how the impact of imposing the tax on cigarettes will be different from creating awareness about its harmful effects. © i) What does a production possibility curve represent? Why is it bowed outward ? (4) (i) af eae saree areTee a er BY at arora H sregareren wat der Bt 8? Saree fet BART SHARE6001 3 (i) frat at wee @ caren aifary fa Rate wR ae ag aT wa Gas AE re whe unrerat tar eet S weara @ fet weak fret ara 1 (ii) ver Sees Sar aw sa eaiat 3 ? aE ae St aH THT Es sat Bats ? 3.) Using demand and supply analysis show the impact of rise in milk prices on the equilibrium price and quantity of cream cheese. If the government does not allow the price of cream cheese to change what problems are likely to arise ? (3) (i) The demand curve for candy bars can be expressed as P = 40 -0.2Q, where P is the price of candy bars measured in Rs. per bar and Q is quantity demanded. If at equilibrium, the candy bars are sold for Rs. 20 each what is the price elasticity of demand at this point ? 6) Gii) Explain using suitable diagrams why OPEC failed to keep the price of oil high in the long run? 6) (i) wir ga Gf Faro aD ete a EE GU aT A AT ant ger Sata wie @ ager Sera ea wa ast aA waa a eakgy 1 ale aa sir ge at spat wai Bat Tt eae fea woe a areny seer a at aera 2 ? (i) F2 ae SF ain aH P= 40-0.2Q B are eat oH aca 2 Tet PAA SA at aaa cen aia at rar at zahd F 1 ae ager 4K HA Rs, 20 wit gars fant 2 at ga fg we aia ot ana cha ae afere (ai) Bafta Rat a vee a amen aifire fH a OPEC aa at Shel at aA wT WH Gar wa A gee BG) 4. (@ Suppose a consumer whose income is Rs. 1000 buys two goods X and Y costing Rs. 20 and Rs. 40 per unit respectively. If income and all prices double. Show what will be the change in the budget line and the consumer equilibrium. 6) (i) How does the income and substitution effect explain the effect of fall in wages on the hours-worked ? What does the labour supply look like if the income effect dominates the substitution effect ? What would be its shape if the substitution effect dominates the income effect ? ) PLO,6001 4 Gii) Why are all Giffen goods inferior but all inferior goods are not Giffen goods ? (3) (i) arr cifarg a ves Sastre firacht aa 1000 era 2 at aeqy X TAT Y wT: 20 wey var 40 waa ofa cars A we a atten 2 1 ale Gas sna gen ew ae et Wt 8 way at saat ore Rear wear ager F aa afta Se ? caiee (i) ser ee wines ware rr at ae F rage F afore ser A wat we EA ae wie aa aren ara S ? ate witenet wa aa ware seers wera Bt atom & oft am ax are sar eho ? af? ara ere wera ware @ after weraaret at at ort Ht ght aa cer rea aa Bh ? il) aH oe ae AD Ret seq Fv MA Ret aay After ae at aE 2? 5. (i Assuming that the ice cream industry is perfectly competitive. A firm in the industry produces 10,000 ice cream cups per year. The average total cost of each ice cream cup is Rs. 4. Each Ice cream cup sells for Rs. 8. What is firm’s marginal cost ? What is the profit or loss a firm earns ? Is the firm in long run equilibrium ? Why or why not ? © (i) Show that the long run average cost (LRAC) curve of a firm is the lower envelop of short run average cost (SRAC) curves. Why does the LRAC curve not touch the minimum point of all the SRAC curves ? Under what conditions can this happen ? ” (ii) What is sunk cost ? Give an example. Q) (i) wer atte agedta ser pH waar 8 1 ge sehr Fe a waa a 10,000 argasita ea want 21 wee ay at shea ae aT 4 waa 2 1 wet Ieee ar 8 ead FH eve 2 ot St Shia ara ear? ? we a Paar oT ar eit Ye 8 ? sar wa Ahenrete agert H 3? al or ait wet? (i) zaizd of fre wer ehfarte stas orra am (LRAC) servants staat arr wat (SRAC) at faet srawT 2 | LRAC ae wit SRAC aat BT GAS ATT faegatl we aa ae aT ? fare Raft Fae were 8? feet ara ger e ? Saree Ife6001 5 6. — (@ Explain the deadweight loss of a monopolist with the help of a diagram. Will perfect price discrimination by a monopolist increase total welfare in the economy ? What will happen to consumer surplus and producer surplus ? Explain. (8) (i) A man is earning Rs. 5,00,000 per annum. He is considering to open a small restaurant of his own. He estimates the following annual costs: Rent of the premises — Rs. 80,000, equipments ~ Rs. 2,80,000 and raw material Rs. 1,50,000. He estimates to earn Rs. 10,00,000. Should this man open the restaurant or not ? Explain using the Concept of economic profit and accounting profit. ©) What is marginal rate of substitution between two perfectly substitutable goods ? Q) (i) fa A wes S Vener S reo err SF are safe re aT aA aE AIRS wa Vener grt ony wi are Ae aiamen Fa Hea Bt are 7 seit sifted wer seaea sores ar wear eh ? carer fare 1 5,00,000 898 aera # art ater ake area waa ar tea le SF ae HF Shara 21 ae cafes wal ar seer cre @ - ATT 80,000 wa fea, aA 2,80,000 wad Srey HK TA 1,50,000 wa sed AT I Ta A saat ar are 10,00,000 wa BY A were e 1 aa wa we SAI HET ay ? afte ya tar art & eidt St wee Bare afarg iti) A got yee cor wena sega at Shit weet ee ser BT ? 7. @ Explain why the value of marginal product of labour (VMPL) curve is the demand curve for labour when there is perfect competition in commodity and factor markets ? (4) (i) If the minimum wage is above the equilibrium wage in a competitive labour market what effect will this have on employment ? Show using a diagram. 6) (ii) Suppose labour is the only input used by a perfectly competitive firm. Whose production function is as follows : PTO.6001 6 Units of labour: 0 1 2 3 4 5 6 Total Product : 0 5 9 12 14 15 15 (a) Calculate the marginal product of each additional worker. (b) Each unit of output sells for Rs. 5. Calculate the value of marginal product of each worker. (c) Compute the demand schedule showing the number of workers hired for wages of Rs. 0, 10, 20 and 30. (4) What happens to this demand curve if the price of output rises from Rs. 5 to Rs. 10 per unit ? 6) (i) eae aA A weg Va AMET ara yeF wARAaT a Rafe Xowe Ss Gaia ‘Teret I FEI aH (VMPL) sae Hit aa aA Slat z ? (i) 2 or S aa F at a aT Tas Agert we I silken ST sea to waa wre wa ? fal St wee S anges (ii) Fer aifary fee een yet wean wat ae ort St gaye Hi fay acta ae 2 wa on genet waa ft 2: srt at gare: 0 1 2 30 4 5 6 ae sere: 0 5 9 12 14 15 15 (3) weds ay satan a tie: Seer are SARE | (a) af aeq aA ee card 5 wad A fend 3 ct wee afte B hia Somer aT ea are SARE (a) er aah a eatey at BA 0, 10, 20 ate 30 Ue aT aA a We afta aT ter rere 1 (8) 3a aia ae at ear Sh ae ag A aha 5 we Tage 10 wea WA THE at at (300)