Institute of Rural Management Anand

PGDM-RM42 – Term I – Mid Term Examination

< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

Ans 1)

B) Revenue= toll price* Traffic

since the demand is inelastic with the 1% increase in price of toll there traffic is decreased only by 0.1%

So, the revenue decreased i.e 230/year is huge and overestimated

Ans 2)

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 Institute of Rural Management Anand
PGDM-RM42 – Term I – Mid Term Examination
< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

The increase in demand is caused by other factors like the expectation of an increase in the price of gold in
future or maybe the increase in the income of consumers , So the demand of gold increases besides
increasing in the price of gold and the curve shifts outwards.

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 Institute of Rural Management Anand
PGDM-RM42 – Term I – Mid Term Examination
< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

answer 3)

b) yes there is an opportunity for trade as trade is based on opportunity cost or we can say
comparative cost advantage.Since mexico has comparatively lower opportunity cost in the production of
corn so it will produce corn and usa has lower opportunity cost in producing corn it will produce phone.

C)

Since the USA is producing phones, it will try to push the final price rightward and similarly Mexico
will try to push the final price leftward. this final price is acceptable by both parties because it lies between
two opportunities cost

D)

I) Inferior goods means as price increases demand will decrease

since corn is inferior good in usa so it has more negotiation power and the final price will pushed towards
1/10C i.e on the right side of bandwidth

2) Since corn is inferior goods in both the countries it is not beneficial to tarde

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 Institute of Rural Management Anand
PGDM-RM42 – Term I – Mid Term Examination
< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

Ans 4)

Demand is elastic

Ans) 5

1) c, buyers are willing and able to purchase at a given price

2) c, income decreases and prices of complements increase.
3) c, violate the assumption that more is preferred over less

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 Institute of Rural Management Anand
PGDM-RM42 – Term I – Mid Term Examination
< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

4) c,consumers will buy more wheat but the share of income spent on wheat falls

5) d ,cross elasticity is small and positive

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 Institute of Rural Management Anand
PGDM-RM42 – Term I – Mid Term Examination
< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

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 Institute of Rural Management Anand
PGDM-RM42 – Term I – Mid Term Examination
< MICRO>
<Date of Examination>
<Name of the Student, Roll Number: Mukul,p42085……>

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