6 Marks Questions from Microeconomics

6 marks questions 1. Using

indifference approach, explain the condition of consumers equilibrium. whether the following statements are true or false giving suitable reasons. TR is constant AR will also be constant

2. State

i. When ii. AVC

can even fall when MC is rising MP falls AP will also falls.

iii. When

3. Explain

the law of variable proportion with the help of TP and MP Curves. producers equilibrium with the help of MC and MR schedule. whether the following statements are true or fates giving suitable reasons. MR is constant and not equal to zero, then TR will also be Constant.

4. Explain

5. State

i. When

ii. As

soon as MC starts rising, AVC also starts rising. product always increasing whether there is increasing returns or diminishing returns to factor.

iii. Total

6. What

are the conditions of consumers equilibrium under the indifference curve approach? What changes will take place if the conditions are not fulfilled to reach the equilibrium? the following schedule find the level of output at which the producer is in equilibrium using MC and MR approach. Also give reasons for your answers Price per unit 8 7 Output 1 2 Total cost 6 11

7. From

6 5 4
8. Explain

3 4 5

15 18 23

the law of returns to a factor with the help of TP and MP schedule. market equilibrium of a good what are effect of simultaneous increase in both demand and supply of that good on its equilibrium price and quantity. the implications of the following

9. Given

10. Explain I. The

feature of differentiated products under monopolistic competition feature large number of seller in perfect competition. reasons state whether the following statements are true and false

II. The

11. Giving

I. AC

falls only when MC falls difference between ATC and AVC is constant. TR is maximum, MR is also maximum.

II. The

III. When

12. Explain

the effect of following on the market demand of a commodity. in price of related goods in the number of buyers

I. Change

II. Change

13. Why

does the different between ATC and AVC decrease with an increase in the level of output? Can these two be equal at same level of output? Explain. is consumers equilibrium/ explain the condition of consumers equilibrium assuming that the consumer consumes only two goods. is the impact of the following on the demand curve for good x? Give reasons.

14. What

15. What

i. Consumer ii. Consumer iii. Price

income rises and good x is a normal good. income falls and good x is an inferior good.

of complementary good y rises.

16. Explain

the reasons for 1) increasing returns to a factor and ii) decreasing returns to a factor.

17. The total fixed cost of a firm is Rs. 12. Given below is its marginal cost schedule. Calculate total cost and average variable cost for each given level of output.

Output (units) Marginal cost (RS.)

1 9

2 7

3 2

4 4

5 8

6 12

18. State three causes each for a rightward shift and a leftward shift of demand curve. 19. How is the equilibrium price and equilibrium quantity of a normal commodity affected by an increase in the income of its buyers? Explain with the help of a diagram. 20. At a given price of a commodity, there is excess demand. Is this price an equilibrium price? If not, how will the equilibrium price be reached? (Use diagram) 21. Calculate total cost and average variable cost of a firm at each given level of output from its cost schedule given below.

Output (Units) 1 2 3 4

Average fixed cost (Rs.) 60 30 20 15

Marginal cost (Rs.) 32 30 28 30

5 6

12 10

35 43

22. Define market demand. State the factors that affect it. 23. How will an increase in the income of the buyers of an inferior good, affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram. 24. At a given price of a commodity, there is excess supply. Is it an equilibrium price? If not, how will the equilibrium price be reached? (Use diagram) 25. Explain the effects of increase in income of the buyers of good X cm the demand for X use diagram showing demand for good on the x-axis and its price on the y-axis. 26. A consumer consumes good X. Explain the effects of fall in prices of related goods on the demand of X. Use diagram showing demand for good X on the x-axis and its price on the y - axis. 27. Explain the effects of change in the income of the buyers of a good on its demand. 28. Explain the effects of change in the prices of related goods on the demand of a given good. 29. Explain briefly the following determinants of supply: I. Increase

in the prices of inputs in tax on the product change

II. Decrease

III. Technological

30. Draw Average Total Cost, Average Variable Cost and Marginal Cost curves in a single graph. Also explain the relation between Marginal Cost and Average Total Cost. 31. Explain the effect of the following on the demand of a good: I. Change

in the income of the consumer in the prices of the related goods

II. Change

32. Define price elasticity of demand. State any four factors that affect it. 33. Explain the law of variable proportions using Total Physical Product and Marginal Physical Product curves. 34. Explain the relation between marginal cost and average variable cost with the help of a diagram. 35. Explain the law of variable proportions with the help of a total and marginal physical product schedule. 36. Explain the relation between marginal cost and average variable cost with the help of a cost schedule 37. Distinguish between: I. Individual II. Change

demand and market demand.

in demand and change in quantity demanded

38. State the phases of the law of variable proportions in terms of total physical product and marginal physical product. 39. Explain the following features of perfect competition: I. Large

number of buyers and sellers products

II. Homogeneous

40. Explain the following: I. Free

entry and exit feature of perfect competition, products feature of monopolistic competition. between the following:

II. Differentiated

41. Distinguish I. Normal

good and Inferior good utility and Total utility demand schedule and Market demand schedule

II. Marginal

III. Individual

42. Identify

the three phases of the Law of Variable Proportions from the following and also give reason behind each phase:

Unit of Variable Input 1 2 3 4 5

43. Explain

Total Physical Product (Unit)

10 22 30 35 30

the features of monopoly market.

44. Explain the term change in demand and represent the same graphically. Also state three factors responsible for change in demand. 45. Explain the terms change in demand and change in quantity demanded. Also state three factors responsible for change in demand. 46. Explain briefly three features of monopolistic competition. Posted by Arun Sharma at 8:50 AM