ALLAMA IQBAL OPEN UNIVERSITY
Level: Bachelor: Autumn 2006
Paper: Micro Economics (Code 131) Maximum marks: 100
Time allowed: 3 Hours Pass marks: 40
Note: ATTEMPT ANY FIVE QUESTIONS. ALL QUESTIONS CARRY EQUAL MARKS
QUESTION NO 1 IS COMPULSORY
Re-write the sentences highlighting correct or incorrect:
1. Microeconomics is not concern with the behavior of small economic units. Correct / Incorrect
2. Human wants are unlimited and the resources are limited. Correct / Incorrect
3. In capitalistic economic system the prices of factors of production are determined by the market forces of demand and supply. Correct / Incorrect
4. Basic motive of a firm is to serve for human welfare. Correct / Incorrect
5. Consumers behavior is affected by social customs. Correct / Incorrect
6. If in a market only one price for a commodity prevails is called imperfect market. Correct / Incorrect
7. Profit is the difference between total revenue and total cost. (TR-TC) Correct / Incorrect
8. All the things having utility are useful. Correct / Incorrect
9. Elasticity of demand is also depending on the income of the consumers. Correct / Incorrect
10. The relation between inputs and outputs is termed as production function. Correct / Incorrect
Explain the Law of diminishing marginal utility. Show how an individual demand curve can be derived from utility analysis.
Describe the main forms of organization. Also mention advantages and disadvantages of each.
Explain the concepts of cost i.e. FC, VC, AC and MC. Also explain the relationship between Average Cost (AC) and Marginal Cost (MC) with the help of diagrams.
What is monopoly? Illustrate how price is determined under monopoly.
Compare and contrast the concepts of Marginal Rate of Substitution (MRS) and Marginal Rate of Technical Substitutions MRTS.
Explain the Term Market; also discuss the classification of markets. Differentiate between perfect and imperfect markets.
Write comprehensive notes on any two of the following:
1. Opportunity Cost 2. Price Discrimination
3. Production Possibility Frontier (PPE)
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