Professional Documents
Culture Documents
Session: 2014 - 2015 (Spring)
Session: 2014 - 2015 (Spring)
Q. No Marks
Section A
Answer the following questions 3x5
1. What is consumers equilibrium? Discuss consumers equilibrium with the help of
indifference curve approach.
2. What is price effect? Decompose price effect into income and substitution effect
through Slutsky approach. How Slutsky approach is different from Hicksian
approach?
3. Define Price elasticity of demand and distinguish its various types. How would you
measure it? Discuss the role of price elasticity of demand in managerial decisions.
Section B
Answer the following questions 5x2
1. It was ascertained that the demand law of vegetable oil for Mr. Arvind and family is
x=100-2p4. The vegetable oil was being sold at Rs. 40 per kg. If its price decreases by
10%, find the elasticity of demand.
2. The utility function of a consumer is given by U=q1q2. Suppose Pq1=1 and Pq2=2. The
consumer wants to spend Rs. 40 for both the goods. What will be his demand function
for q1 and q2?
3. There are only two consumers in the market. Their demand equations are:
Individual 1: X1=45-9p
Individual 2: X2=7-p
Derive market demand equation?
5. Derive the relationship between AR, MR and price elasticity of demand (ep)?
Section C