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Questions and Answers
What is the profit-maximizing condition for a monopolist?
What is the profit-maximizing condition for a monopolist?
If average product reaches its maximum, marginal product will always be greater than average product.
If average product reaches its maximum, marginal product will always be greater than average product.
False
What does it mean if the demand for a product is highly elastic?
What does it mean if the demand for a product is highly elastic?
Consumers are very responsive to changes in price.
The ______ curve for a commodity is downward sloping because of the law of diminishing marginal utility.
The ______ curve for a commodity is downward sloping because of the law of diminishing marginal utility.
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Match the following concepts with their definitions:
Match the following concepts with their definitions:
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An increase in fixed costs in a perfectly competitive market will not affect the firm's pricing or quantity produced in the short run.
An increase in fixed costs in a perfectly competitive market will not affect the firm's pricing or quantity produced in the short run.
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Explain the relationship between short-run and long-run average cost curves.
Explain the relationship between short-run and long-run average cost curves.
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Under which market structure is social optimum not reached while firms make zero excess profits?
Under which market structure is social optimum not reached while firms make zero excess profits?
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What determines the equilibrium price and quantity in a market with a dominant firm?
What determines the equilibrium price and quantity in a market with a dominant firm?
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Efficient combination of factors of production can be represented by isoquants and isocost lines.
Efficient combination of factors of production can be represented by isoquants and isocost lines.
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Explain the concept of dead weight loss under monopoly.
Explain the concept of dead weight loss under monopoly.
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In monopolistic competition, firms operate with __________ capacity due to product differentiation.
In monopolistic competition, firms operate with __________ capacity due to product differentiation.
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Which of the following factors does not determine price elasticity of demand?
Which of the following factors does not determine price elasticity of demand?
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The law of variable proportions states that output will always increase with additional units of input.
The law of variable proportions states that output will always increase with additional units of input.
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Describe how marginal productivity affects the hiring decision of firms.
Describe how marginal productivity affects the hiring decision of firms.
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Study Notes
Examination Paper Information
- Paper Code: 589, 3035
- Unique Paper Code: 2922071102
- Course Name: Microeconomics
- Course: Bachelor of Business Administration (Financial Investment Analysis) - BBA (FIA)
- Semester: I
- Duration: 3 Hours
- Maximum Marks: 90
- Instructions: Include writing roll number, answering all questions and use simple calculators where applicable.
Question 1 - Four to Choose From
- Topic: Marginal product, average product, variable input, and profit maximization.
- Question: "If labour is the only variable input, average product reaches it's maximum at the point where marginal product equals average product. True or False, explain."
Question 2 - Multiple Sub-Questions
- Topic 1: Total cost function, effect of demand curve on profit, elasticity, perfect competition.
- Question 1a: Calculate monopolist profit from total cost function (C = 3Q²), demand curve (P = 1200 – Q)
- Question 1b: Evaluate if the increased price of apples (due to heavy snowfall) and increased total revenue imply a highly elastic demand. (True or false)
- Question 1c: Discuss if right angled isoquants indicate constant marginal rate of technical substitution.. (True or false)
- Question 1d: State whether increasing fixed costs will increase the price or output of a good in a perfectly competitive market (True or false).
- Question 1e: Explain whether a decrease in consumption of good X caused by an increase in income will lead to an increase in consumption when price of X increases.
- Topic 2: Monopolistic markets, demand curves, average cost, social optimum.
- Question 2b: Calculate prices and quantities maximizing profit in two different markets for a monopolist selling in each market, given detailed demand and total cost functions.
- Question 2c: Explain the relationship between short run and long run average cost and why the long-run average cost curve is considered a planning curve.
- Question 2d: Discuss the concept of Social optimum under monopolistic competition in relation to perfect competition.
- Question 2d alternative: Discuss the relationship between demand curve of a good and law of diminishing marginal utility..
Question 3 - Multiple Sub-Questions
- Topic 1: Variable proportion, cost curves, short run.
- Question 3a: Explain the impact of the law of variable proportion on short-run cost curves.
- Question 3b: Explain why isoquants are downward sloping and convex to the origin. (Hint: MRS)
- Question 3c: Calculate marginal productivity of capital, knowing the marginal rate of technical substitution (MRTSLK) and marginal productivity of labor using specific data.
Question 4 - Multiple Sub-Questions
- Topic 1: Equilibrium determination in a market with dominant firm and small follower firms.
- Question 4a: Explain the determination of equilibrium price and quantity in a market with dominant firm and small follower firms.
Question 5 - Multiple Sub-Questions
- Topic: Modern theory of costs, elasticity, oligopoly, deadweight loss, monopolistic competition.
- Question 5a to 5d: Explain the elements of the topic, with short notes, explaining features and drawing relevant diagrams at applicable points.
Additional General Question Topics
- Discuss efficient combinations of factors: explain efficient factor combinations using isoquants and isocost lines.
- Profit maximizing quantity, marginal revenue = marginal cost, interpretation.
- Define pure monopoly, conditions leading to monopoly, forces limiting monopoly power.
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Description
This examination paper covers key concepts in Microeconomics, focusing on marginal and average products, profit maximization, and cost functions. It includes questions requiring calculations based on demand curves and perfect competition, suitable for BBA students in their first semester.
