B.Com/BBA Micro Economics April 2024

Description

Micro Economics

April 2024 Examination

 

 

Q1. In the below table, the consumption of glass of water and marginal Utility for the same is given. Observe the given table and comment on the same as to which theory is shown in the table. Enumerate the theory and mention any two application for this theory.          (10 marks)

Units	Marginal Utility ( Utils )
1st Glass	60
2nd Glass	52
3rd Glass	40
4th Glass	35
5th Glass	0
6th Class	-3

 

Ans 1.

Introduction:

The provided table offers a glimpse into the dynamics of consumer behavior through the lens of marginal utility, a fundamental concept in microeconomics. It presents the consumption of glasses of water alongside their corresponding marginal utility, illustrating the principle of diminishing marginal utility. As consumers indulge in additional units of a good, the satisfaction derived from each subsequent unit tends to decrease. This concept holds immense significance in understanding how individuals allocate resources and make decisions in the realm of consumption. By delving into the intricacies of the table, we can gain insights into consumer preferences, pricing strategies, and It is only half solved

 

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Q2. “Utility is a significant concept in economics because it helps to explain many aspects of supply, demand, and pricing.” Enumerate the concept on utility, cardinal and ordinal utility concept. Mention the various assumptions of ordinal utility approach.  (10 Marks)

Ans 2.

Introduction:

Utility, a cornerstone concept in economics, serves as a fundamental tool for understanding consumer behavior, supply, demand, and pricing mechanisms. It refers to the satisfaction or benefit that individuals derive from consuming goods and services. In this essay, we will explore the cardinal and ordinal utility concepts, elucidating their significance in economic analysis. Cardinal utility denotes the quantitative measurement of utility, whereas ordinal utility emphasizes the ranking or preference order of goods and services. Both concepts play pivotal roles in shaping

 

Q3 a. Suppose there is a change in the demand of cold drinks from 700 Units to 1000 Units because of the fall in the price from Rs 15 to Rs 10. Calculate the price elasticity of cold drinks. (5 Marks)

Ans 3a.

Introduction:

Price elasticity of demand (PED) is a crucial concept in economics that measures the responsiveness of quantity demanded to changes in price. In this scenario, the demand for cold drinks has experienced a shift from 700 units to 1000 units due to a decrease in price from Rs 15 to Rs 10. Calculating the price elasticity of cold drinks will provide valuable insights into the sensitivity of consumers to price changes.

Concept and application

To calculate the price elasticity of demand

 

Q3 b. Following table shows the effect on price and quantity of different demand and supply curve. Substantiate the meaning of shift in the demand curve and fill the below table. (5 Marks)

	Effect on Price	Effect on quantity
If Demand Raises
If Demand Falls
If Supply Raises
If Supply falls

 

Ans 3b.

Introduction

Understanding shifts in demand and supply curves is fundamental in economics as they determine the equilibrium price and quantity in a market. A shift in the demand curve occurs when factors such as consumer preferences, income, or expectations change, leading to a change in the quantity demanded at every price level. Conversely, a shift in the supply curve happens due to alterations in factors like production costs, technology, or government policies, affecting the quantity supplied at each price level. This table analysis aims to elucidate the impacts of such shifts on price and quantity, essential for comprehending market dynamics and