University of Management and Technology

School of Business and Economics

FINAL TERM EXAM

Course Code: EC – 210 Programs: BBA/BS (H)

Semester: Spring 2020 Marks: 30
Course Title: Micro Economics Time: 240 min
R. Person: Muhammad Shahid Hassan

Name:__________________________ I.D#_____________________

Date: __________________________ Section: ______C – 3_________

______________________
Signature of the student
Q–1 Q–2 Q–3
Maximum Marks 10.0 10.0 10.0
Marks Obtained

Total Marks ________ Total Marks Obtained ________

___________________
Signature of instructor
Remarks

Instructions:

1) All questions are compulsory.

2) Answers should be precise and to the point.
3) Answers should be hand written.
4) Neatness in the exam is highly encouraged.
5) Time limit should be taken seriously.
 Q – 1: Answer the questions for the following given schedules: (10 = 2 x 5)
Schedule
Price Quantity Price Quantity Expenditures
Income of Wage
Points of Demanded of Supplied on Research &
a Consumer Rate
Battery for Battery UPS for Battery Development
A 10 2000 100 40 100 200 305
B 20 6000 70 60 140 160 335

(a) Find out arc elasticity of demand for Battery with respect to price and interpret
your result. (2)
(b) Find out arc elasticity of demand for Battery with respect to income, identify
the type of a product which consumer is using and also interpret your result.
(2)
(c) Find out arc elasticity of demand for Battery with respect to cross price,
identify the types of good A and good B which the consumer is using and also
interpret your result. (2)
(d) Find out arc elasticity of supply for Battery with respect to cross price, identify
the type of goods UPS and Battery and also interpret your result. (2)
(e) Find out arc elasticity of supply for Battery with respect to expenditures on R
& D and also interpret your result. (2)

Q – 2: A market for computers is in equilibrium in Pakistan. What happens to

market equilibrium point, equilibrium price and equilibrium quantity if
the following given price and non price factors of demand and supply changes.
Make graphical representation and provide explanation for your each
case to answer the following questions. (10)
(a) Govt. of Pakistan increases tax on the purchase of computers. (2)
(b) Govt. of Pakistan reduces corporate income tax rate in Pakistan. (2)
(c) Central Bank reduces interest rates for the investors in Pakistan. (2)
(d) Online classes has begun due to pandemic COVID 19 in Pakistan, (2)
(e) Computer users dying due to pandemic COVID 19 in Pakistan. (2)
 Q – 3: Let in the short run, an organization provides 20 units of fixed input like
capital to each unit of variable input like labor in order to produce its output in
a perfectly competitive market. The firm plans to sell its product at price
Rs.10/- per unit. The firm buys labor at wage Rs.600/- per unit and capital at
interest Rs.15/- per unit respectively. The production function used by the firm
in order to produce its output is: (10)

Q = K2/3 L2/5

T. M.
K L QX PX TR AR MR MPL MRPL VMPL W TFC TVC TC MC
PROFIT PROFIT
0 0 - - - - - - -
1 100
2 210
3 310
4 400
5 480
6 550
7 610
8 660

Using the above information, answer the following questions:

(a) Using your concepts complete the above table. (4)

(b) Write a summary of the entire Table. (1)
(c) Find out level of returns for the firm. (1)
(d) Define firm equilibrium condition in short run along with its formula. Use the
above table to identify optimum units of variable input at this point. (1)
(e) Identify maximum profit and relate it with marginal profit. (1)
(f) Discuss relationship between production curves and cost curves in general.
Also make graph to support your answer. (2)

Note: Please upload your Completed Final Term Exam in “PDF” on the following link.

https://docs.google.com/forms/d/e/1FAIpQLScU0r4VHl99sQvZKP-
ef6qOv8u030NGISovGgW6S-RnOHLnQQ/viewform?usp=sf_link

Good Luck!!!