Subject - Business Economics I (Microeconomics)

Level - BBS Year I

Brief Answer Question

Attempt all questions.

1) Define given terms 3*1 = 3

a. Advertisement Elasticity of Demand
b. Marginal Rate of Technical Substitutions
c. Increasing Returns to Scale
2) What do you mean by law of diminishing marginal utility and what is the required 2
condition to attain equilibrium for two commodity case ?

Descriptive Answer Questions. 10*3 = 30

Attempt any three.

3) Explain the various methods of calculating cross elasticity of demand.

4) Why consumer gets maximum satisfaction when the indifference curve is tangent to
budget line ?
5) Given the following TVC schedule and TFC = Rs. 12

Q 1 2 3 4 5 6
TVC 6 8 9 10.5 14 21
(Rs)

a. Find TC, AC AFC, AVC and MC for the various levels of output. 3
b. Plot the same graph the AVC, AC and MC. 3
c. Examine the relationship between AVC, AC and MC ? 4
6) Explain the methods of finding out least cost combination of input in theory of
production ?

Analytical Answer Questions 15*1 = 15

Attempt any one.

7) Explain the Hicksian approach of decomposition of price effect into substitution and
income effect.
8) What do you mean by the market efficiency ? How is market efficiency measured on the
basis of consumer's surplus and producer's surplus?