NATIONAL LAW INSTITUTE UNIVERSITY

BHOPAL
B.A.LL.B. ( Hons. ) I TRIMESTER REPEAT EXAMINATION, APRIL- 2006 ECONOMICS- I Maximum Marks : 50

Time : 3 Hours

INSTRUCTIONS :
1. 2. All questions are compulsory. Marks allotted to each question are mentioned against it.

Q1.A. Fill in the blanks:

i) ii) iii) iv) v) B. vi) a. b. c. d. vii) a. b. c. d. viii) a. b. c. d. ix) a. b. c. d. x) a. b. c. d. ________costs are those costs which vary with output. The cross price elasticity of demand for complements in less than _______ Long run is defined as a period when all the quantities of all factors of production are __________. A point inside the production possibility indicates______ utilization of resources. _______ is a market structure which consists of a single seller. Choose the best answer: The average cost curve is U-shaped in the short run because of The law of variable proportions Economics of scale Returns to scale Diseconomics of scale Total fixed costs divided by output is AFC AVC Marginal cost Marginal fixed cost If a 20 percent increase in price leads to a 20 percent decree in quantity demanded, the coefficient of price elasticity of demand is 20 one two zero The profit maximizing output for a firm under monopoly is given by: MC = MR AVC = AFC TFC = TVC ATC=MC A market where there are a few, interdependent sellers is Oligopoly Monopoly Perfect competition Bilateral monopoly

C.

xi)
xii) xiii) xiv) xv) D.

State whether the following statements are True or False: If MRTS LK equals 10, then MPL divided by MPK is 10. The law of returns to scale is long run law A linearly homogenous production function shows constant returns to scale. A pair of indifference curves can intersect each other. The demand curve confronted by a firm under perfect competition is downward sloping. Match the following: xiv) Cardiral utility xvii) AR=MR xviii) Isoquants xix) Short run production xx) AFC curve a) b) c) d) e)

Perfect competition Rectangular hyperbola Law of variable proportions Production Alfred Marshall (10 Marks) Q2. The production possibility curve represents a tradeoff in the production of two goods. Discuss. (10 Marks) OR Distinguish betweena. Increase in demand and increase in quantity demanded. b. Increase in supply and increase in quantity supplied. Q3. On a set of coordinate axes, sketch the AFC, AVC, ATC and MC curves in the short run. Describe each of them. (10 Marks) OR Discuss the reasons why the firm, if it is to minimize the cost of producing a given output, must equate the marginal rate of technical substitution and the factor price ratio. Explain consumer equilibrium under indifference curve analysis. (10 Marks) OR Describe the properties of indifference curves. Support your answer graphically. Q5. Critically examine Paul Sweezys Kinked demand curve theory. (10 Marks) OR Demonstrate graphically, in a perfectly competitive market structure, the following cases: A firm that incurs economic losses in short run. A firm that makes supernormal economic profits in the short run.

Q4.

a. b.