BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI

SECOND SEMESTER 2018-2019

Tutorial Test - 2 A
Course No. : ECON F211 Max. Marks : 24
Course Title : Principles of Economics Duration : 30 mints
Date : 02/02/2019 Weightage : 6%
Q1. Refer to the schedule of production of clothes (on X axis) and food (on Y axis) for an economy in the table given
below. The economy is not producing any units of clothes currently. Enumerate, that as the economy moves along the
production possibility frontier (PPF) the law of increasing opportunity cost holds true by calculating opportunity cost
incurred in subsequent production of clothes. Write your final answers by filling in the blanks in the opportunity cost
(OC) column. 8 Marks
Units of clothes Units of food OC
8 or
0 5
0.33
3 4 6 or
5 3
0.50
0.67 4 or
6.5 2

7.5 1
1
2
0 marks
8 0

Q2. Currently the demand and supply of a given commodity is in equilibrium. For the situations given below specify
(ceteris paribus) the most likely outcome whether either the demand curve will witness an Inward or Outward shift or
the supply curve will witness an Inward or Outward shift, or there will be No Change. Write your answers in the blanks
given after each statement using letters D for demand or S for supply curve and letters I or O for inward or outward
respectively. Use NC for No Change. 4*2 Marks
Assume: The commodity in question is a type of a cereal which is packaged and sold in a cereal box.
A) A new report from the Surgeon General suggests that consuming cereal helps to cure obesity . DO
B) An increase in the price of milk which is consumed along with the cereal. DI 2 or 0
C) A picture of a popular sports figure, such as PV Sindhu, on the cereal box. DO marks
D) An increase in the price of a very important ingredient used for manufacturing the cereal. SI
each
Q3. Refer to the demand and supply function given below and answer the questions that follow:
Qd =1000−20 P
Q s =500+30 P

A) If currently the quantity supplied is 860 units, calculate the amount of excess supply (surplus) or excess demand
(shortage) in this situation. Show all the necessary calculations on the other side of the page and write your
final answer below. 4 Marks

Space for final answer 100 units of EXCESS SUPPLY or SURPLUS

4 or 2 or 0 marks
B) Calculate the total revenue of a firm that sells 45 units for the price at which there is neither a shortage nor a
surplus. Show all the necessary calculations on the other side of the page and write your final answer below.
4 Marks

Space for final answer TOTAL REVENUE OF Rs. 450 4 or 0 marks

Name: ID. No: Section No:

BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI

SECOND SEMESTER 2018-2019
B
Tutorial Test - 2
Course No. : ECON F211 Max. Marks : 24
Course Title : Principles of Economics Duration : 30 mints
Date : 02/02/2019 Weightage : 6%
Q1. Refer to the schedule of production of clothes (on X axis) and food (on Y axis) for an economy in the table given
below. The economy is not producing any units of clothes currently. Enumerate, that as the economy moves along the
production possibility frontier (PPF) the law of increasing opportunity cost holds true by calculating opportunity cost
incurred in subsequent production of clothes. Write your final answers by filling in the blanks in the opportunity cost
(OC) column. 8 Marks
Units of clothes Units of food OC
8 or
0 5
0.22
4.5 4 6 or
7.5 3
0.33

9.75 2
0.44 4 or
11.25 1
0.67
0 marks
12 0
1.33

Q2. Currently the demand and supply of a given commodity is in equilibrium. For the situations given below specify
(ceteris paribus) the most likely outcome whether either the demand curve will witness an Inward or Outward shift or
the supply curve will witness an Inward or Outward shift, or there will be No Change. Write your answers in the blanks
given after each statement using letters D for demand or S for supply curve and letters I or O for inward or outward
respectively. Use NC for No Change. 4*2 Marks
Assume: The commodity in question is a type of a cereal which is packaged and sold in a cereal box.

A) A decrease in the price of a commodity considered a close substitute of the cereal. DI 2 or 0

B) A decrease in the price of cereal. NC_
C) An increase in income assuming that cereal is an inferior good DI__ marks
D) A decrease in the price of a very important ingredient used for manufacturing the cereal _ SO_
each
Q3. Refer to the demand and supply function given below and answer the questions that follow:
Qd =1000−40 P
Q s =500+30 P

A) If currently the quantity demanded is 760 units, calculate the amount of excess supply (surplus) or excess
demand (shortage) in this situation. Show all the necessary calculations on the other side of the page and write
your final answer below. 4 Marks

Space for final answer 80 units of EXCESS DEMAND or SHORTAGE 4 or 2 or 0 marks

B) Calculate the total revenue of a firm that sells 70 units for the price at which there is neither a shortage nor a
surplus. Show all the necessary calculations on the other side of the page and write your final answer below.
4 Marks
Space for final answer __TOTAL REVENUE of Rs. 500_ 4 or 0 marks