Micro Economics

1
ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
B.B.M – I SEMESTER
MICRO ECONOMICS
Time: 3 Hours Max. Marks: 100
SECTION – A
I. Answer ALL Questions. Each question carries 2 marks. (10 x 2 = 20)
1. “Managerial economics is an integration of economic theory, decision, and science
and business management” Comment.
2. Explain briefly the term “Economic Development.”
3. State the reason behind the statement that “two indifference curves cannot intersect,”
with appropriate illustration.
4. Define the concept of “cross elasticity of demand.”
5. What are the considerations that are involved while fixing “Cost Plus” price policy?
6. Briefly explain the concept of “Dual Pricing.”
7. Explain the term “production function.”
8. What is meant by long run average cost? Why is it known as the envelop curve?
9. With the help of data given below, calculate marginal returns.
Units 1 2 3 4 5 6 7
Total
Returns
45 95 125 145 155 155 140
10. Who adopts price discrimination? How does price discrimination occur?
SECTION – B
II. Answer any FOUR. Each question carries FIVE marks. (4 x 5 = 20)
11. Explain the Concept of Equilibrium.
12. What is budget line? What does the slope of budget line measure?
13. Assuming that the same rate of change continues, what would be the predicted sales
for the year 2015?
Year 2006 2007 2008 2009 2010 2011 2012
Sales
(Rs. Lakhs)
10 12 15 18 24 25 30
14. Why is short run average cost curve U-shaped?
2
15. What is meant by “law of returns to scale.” Briefly explain different types of returns
to scale.
16. Explain the conditions necessary for the existence of perfect competition.
SECTION – C
III. Answer any THREE. Each question carries FIFTEEN marks. (3X15 = 45)
‘
17. Distinguish between plant, firm and industry.
18. Explain the law of demand. What are the determinants of demand? State
exceptions to the law of demand.
19. Elucidate the factors influencing pricing policy? Comment on the objectives behind
implementing an appropriate pricing policy. Mention four important methods of
pricing?
20. Discuss the law of variable proportion with the help of a table and diagram. What
are the essential conditions of its applicability?
21. What is monopolistic competition? How is equilibrium price and output determined
under monopolistic competition?
SECTION – D
IV. Compulsory Case Study (1 x 15 = 15)
22. Shiny got promoted to her second semester BBM class. Her father gave her Rs. 2000
to make adequate purchases for the ensuing semester. She has been longing to buy
some new wearing apparels for quite a time. One apparel will approximately cost Rs.
500 per set. She is in need of some of some new books also. The cost price of each book
is Rs. 100. But she is willing to sacrifice some investment in clothes to buy books .
1. Since she needs both goods, how will you explain consumer behavior in spending on
both units, and maintain the same level of utility, when some quantity of one
commodity is substituted for additional units of another? (5 marks)
2. Explain when she will reach maximum satisfaction (equilibrium),given the budget
and the price of apparels and books. Explain through a diagram. (10 marks)