MICROECONOMICS QUESTION BANK

UNIT 1: INTRODUCTION

1. Distinguish between a) Microeconomics and Macroeconomics

b) Positive and normative Economics

2. ‘Scarcity and choice problem go together” Do you agree with the statement?
Give reasons in support of your answer.

3. Discuss the main central problems of an economy.

4. Define PPC. Discuss its properties. In what cases it can shift or rotate? Use
diagram.

5. Differentiate between Marginal opportunity cost and opportunity cost with

example.

6. State giving reasons true/false

a. A point above PPC represents the growth of resources.

b. The concavity of PPC implies diminishing marginal rate of transformation.

c. Massive unemployment shifts the PPC to the left.

UNIT 2: Consumer eq. And demand

1. Explain the relationship between total utility and marginal utility with
example.

2. A consumer consumes only two good s X and Y and is in eq.. If price of good
Y rises, what will be the reaction of the consumer? Explain.

3. Distinguish between decrease in demand and decrease in quantity

demanded using diagram.

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

a) rise in income b) rise in price of related goods

5. Explain any three properties of Indifference curve.

6. Explain consumer’s eq. Using ordinal utility approach? What changes will
take place if the conditions are not fulfilled to reach eq? Use diagram

7. Under what situation there will be a parallel shift in price line?

8. State the factors of rightward shift of demand curve. Explain any one.

9. How does proportion of income spent affect elasticity of demand?

10. Explain total expenditure method of measuring price elasticity of demand.

11. What are monotonic preferences?

UNIT 3 : Producer behaviour and supply

1. Explain the law of variable proportions through the behaviour of both total
product and margin product? Give reasons.

2. State the relation between marginal product and average product. Use
diagram?

3. Draw total fixed cost and average fixed cost curves. Explain their shapes?

4. Draw average cost, average variable cost and marginal cost in a single
diagram. Also explain the relationship between ATC and AVC?

5. A firm can sell as many units of a good as it wants to sell at a given price.
Draw- a) total revenue curve and b) average revenue and marginal revenue
curve of the firm.

6. Explain the marginal cost and marginal revenue approach for producer’s
equilibrium using a schedule?

7. Explain the distinction between change in quantity supplied and change in

supply. Use diagram?

8. Explain the effect of the following on the supply of a commodity.

a) Rise in input prices

b) Rise in prices of other goods

9. Distinguish between perfectly elastic supply and perfectly in elastic supply?

10. What would be the shape of a demand curve so that TR curve is

a) A positively sloped straight line passing through the origin

b) A horizontal line

UNIT-4 FORMS OF MARKET AND PRICE DETERMINATION

1. Why is the AR curve of a firm under monopolistic competition is more

elastic than under monopoly. Explain?

2. Explain the implications of the following

a) Large number of sellers and buyers under perfect competition

b) Freedom of entry and exit of firms

3. With the help of a suitable diagram explain the process of determination of

equilibrium price of a commodity under perfect competition?

4. Market for a good is in equlibrium. There is simultaneous increase in both

demand and supply of the good, explain its effects on the market price?

5. Explain price ceiling. Use diagram?

6. Explain price floor. Use a diagram?

7. Draw AR and MR curves of a firm under perfect competition and monopoly?