6 Marks Questions from Microeconomics

6 marks questions

1. Using indifference approach, explain the condition of consumer’s equilibrium.

2. State whether the following statements are true or false giving suitable reasons.

i. When TR is constant AR will also be constant

ii. AVC can even fall when MC is rising

iii. When MP falls AP will also falls.

3. Explain the law of variable proportion with the help of TP and MP Curves.

4. Explain producer’s equilibrium with the help of MC and MR schedule.

5. State whether the following statements are true or fates giving suitable reasons.

i. When MR is constant and not equal to zero, then TR will also be Constant.

ii. As soon as MC starts rising, AVC also starts rising.

iii. Total product always increasing whether there is increasing returns or diminishing returns to factor.

6. What are the conditions of consumer’s equilibrium under the indifference curve approach? What changes will take place if the conditions are not fulfilled to reach the equilibrium?

7. From the following schedule find the level of output at which the producer is in equilibrium using MC and MR approach. Also give reasons for your answers

Price per unit	Output	Total cost
8	1	6
7	2	11
6	3	15
5	4	18
4	5	23

8. Explain the law of returns to a factor with the help of TP and MP schedule.

9. Given market equilibrium of a good what are effect of simultaneous increase in both demand and supply of that good on its equilibrium price and quantity.

10. Explain the implications of the following

I. The feature of differentiated products under monopolistic competition

II. The feature large number of seller in perfect competition.

11. Giving reasons state whether the following statements are true and false

I. AC falls only when MC falls

II. The difference between ATC and AVC is constant.

III. When TR is maximum, MR is also maximum.

12. Explain the effect of following on the market demand of a commodity.

I. Change in price of related goods

II. Change in the number of buyers

13. Why does the different between ATC and AVC decrease with an increase in the level of output? Can these two be equal at same level of output? Explain.

14. What is consumer’s equilibrium/ explain the condition of consumer’s equilibrium assuming that the consumer consumes only two goods.

15. What is the impact of the following on the demand curve for good x? Give reasons.

i. Consumer income rises and good x is a normal good.

ii. Consumer income falls and good x is an inferior good.

iii. Price of complementary good y rises.

16. Explain the reasons for 1) increasing returns to a factor and ii) decreasing returns to a factor.

17. The total fixed cost of a firm is Rs. 12. Given below is its marginal cost schedule. Calculate total cost and average variable cost for each given level of output.

Output (units)	1	2	3	4	5	6
Marginal cost (RS.)	9	7	2	4	8	12

18. State three causes each for a rightward shift and a leftward shift of demand curve.

19. How is the equilibrium price and equilibrium quantity of a normal commodity affected by an increase in the income of its buyers? Explain with the help of a diagram.

20. At a given price of a commodity, there is ‘excess demand’. Is this price an equilibrium price? If not, how will the equilibrium price be reached? (Use diagram)

21. Calculate total cost and average variable cost of a firm at each given level of output from its cost schedule given below.

Output (Units)	Average fixed cost (Rs.)	Marginal cost (Rs.)
1	60	32
2	30	30
3	20	28
4	15	30
5	12	35
6	10	43

22. Define market demand. State the factors that affect it.

23. How will an increase in the income of the buyers of an ‘inferior good’, affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram.

24. At a given price of a commodity, there is excess supply. Is it an equilibrium price? If not, how will the equilibrium price be reached? (Use diagram)

25. Explain the effects of increase in income of the buyers of good ‘X’ cm the demand for ‘X’ use diagram showing demand for good on the x-axis and its price on the y-axis.

26. A consumer consumes good ‘X’. Explain the effects of fall in prices of related goods on the demand of ‘X’. Use diagram showing demand for good ‘X’ on the x-axis and its price on the y - axis.

27. Explain the effects of change in the income of the buyers of a good on its demand.

28. Explain the effects of change in the prices of related goods on the demand of a given good.

29. Explain briefly the following determinants of supply:

I. Increase in the prices of inputs

II. Decrease in tax on the product

III. Technological change

30. Draw Average Total Cost, Average Variable Cost and Marginal Cost curves in a single graph. Also explain the relation between Marginal Cost and Average Total Cost.

31. Explain the effect of the following on the demand of a good:

I. Change in the income of the consumer

II. Change in the prices of the related goods

32. Define price elasticity of demand. State any four factors that affect it.

33. Explain the law of variable proportions using Total Physical Product and Marginal Physical Product curves.

34. Explain the relation between marginal cost and average variable cost with the help of a diagram.

35. Explain the law of variable proportions with the help of a total and marginal physical product schedule.

36. Explain the relation between marginal cost and average variable cost with the help of a cost schedule

37. Distinguish between:

I. Individual demand and market demand.

II. Change in demand’ and ‘change in quantity demanded’

38. State the phases of the law of variable proportions in terms of total physical product and marginal physical product.

39. Explain the following features of perfect competition:

I. Large number of buyers and sellers

II. Homogeneous products

40. Explain the following:

I. ‘Free entry and exit’ feature of perfect competition,

II. ‘Differentiated products’ feature of monopolistic competition.

41. Distinguish between the following:

I. Normal good and Inferior good

II. Marginal utility and Total utility

III. Individual demand schedule and Market demand schedule

42. Identify the three phases of the Law of Variable Proportions from the following and also give reason behind each phase:

Unit of Variable Input	Total Physical Product (Unit)
1	10
2	22
3	30
4	35
5	30

43. Explain the features of monopoly market.

44. Explain the term ‘change in demand’ and represent the same graphically. Also state three factors responsible for ‘change in demand’.

45. Explain the terms ‘change in demand’ and ‘change in quantity demanded’. Also state three factors responsible for ‘change in demand’.

46. Explain briefly three features of monopolistic competition.