Tribhuvan University

Faculty of Humanities and Social Sciences

Central Department of Economics, Kirtipur
Pre-Final Examination, 2077

Master Degree in Economics Full Marks: 20

Course Title: Microeconomics - I Pass Marks: 10
Year: First Time: 1.30 hrs.
Semester: I

Candidates are required to answer the questions in their own words where applicable. The
figures in the parenthesis indicate the full marks of the questions.

Group A
Answer any ONE question 1 x 8=8
1. Explain the indirect utility function with the help of the function: U (XY) subject
to PxX+PyY=M. Also discuss the properties of indirect utility function in brief.
2. The production function is given as 𝑦 = (𝛼 𝑥 + 𝛼 ) .
i. Find the technical rate of substitution (TRS)
ii. Calculate the elasticity of substitution
iii. Interpret the result of ( i ) and ( ii )
iv. What would be the type of production function if 𝜌 = 0 and = 1?
v. Draw the shape of isoquants if 𝜌 = −∞.
Group B
Answer any FOUR questions 4 x 3=12
3. Why do economists need model? Explain with the relevant examples.
4. Explain the major differences between deductive and inductive methods of
analysis.
5. Discuss the concept of duality with the help of figures highlighting the differences
between utility maximization and expenditure minimization problems.
6. A firm has two plants with respective cost functions 𝑐 (𝑦 ) = 𝑦 and 𝑐 (𝑦 ) = 𝑦
such that 𝑦 + 𝑦 = Y where Y is the total output of the firm. What is the cost function
of the firm?
7. Distinguish between homogeneous and homothetic technologies with examples
where relevant.