842 12 [This question paper contains 12 printed pages.

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Your Roll No .
t?
842

2272202301
: .:--
.: t . Name of the Paper Intermediate Micrtieconomics I:
Behavioural Foundations of
Market Interactions

Name of the Course B.A. (Programme)

Semester/Annual III
Duration : 3 Hours Maximum Marks : 90
,,
Instructions for Candidates

1. Write your Roll No. on the top immediately on receipt

of this question paper.

2. The question paper consists of two parts i.e., Part A

and Part B.

3. Answer any four questions from Part A and any two

questions from Part B.

4. Answers may be written either in English or Hindi;

but the same medium should be used throughout the
paper.

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(b) Define the Marginal Rate of Technical Substitution

and show how it relates to marginal products.

1. ~~-~~~~~~ ~~~~ 3N-'IT
dfji;fi'llcfi ~ I ( c) Define the law of supply for a competitive firm.

How does a change in input price affect the firm's

supply curve? Explain

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(d) What is the difference between the demand
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function and the inverse demand function?
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(2,3,6,4)

PART A (<fi) ~~cfit~~~~('fll@~~cfflf

~ i\-ar t?

l. (a) .Mayur went to a restaurant with 24 rupees for ("{cf) acfi-i)cfil ~ cfit ~ ~ qil' ~ ~ ~
having breakfast. He had options to buy Samosa ~~~~~~!~~I
and Sandwich having prices of 4 and 6 rupees
respectively. Draw a budget line in this case. ("lf) ~ ~ ~ ~ ~ ~-~ ~ qil' ~

(b) If the price of good x doubles and the price of ~I ~~if qitclJ.i ~ cfit ~ ~ qil' ~
good y halves, will the budget line become steeper ~ "cfi«IT t? ~ ~I

or flatter?
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(cfi) a%1fHcfi • ~ cfl1i ~ ~ •
(c) If all prices double and the income of the consumer
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also doubles, will the consumer become better off
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or worse off?
(5,5,5)
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ch'li@ 3ITTlt m ~ t, m ~ ~ ffiT ~ <IT ~

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m~?
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(1r) ~ ~ ~ • m ~ t 3ft{ ~ ci\t aw:r

8. (a) What is the difference between avoidable cost
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and sunk cost of a firm?
M<1T•m~?

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2. (a) If commodity x is good and y is bad, draw some
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indifference curves and also indicate the

preference direction with increasing income of the

7. (a) "The Long-run average cost curve is the lower
consumer.
envelope of various short-run average cost
(b) Show that tangency of the Indifference curve with
curves". Explain this statement with the help of a
. the budget line is a necessary but not a sufficient
diagram.
condition for optimality.
(b) Suppose a particular firm produces output using
(c) Explain the four properties of an Indifference
two inputs that are perfectly substitutable. For
Curve with the help of graphs. (5,5,5)
given input prices, how the firm will select its

least cost input combination? Explain using the

('ifi) ~ ~ X ~ % ~ Y 'ffllGl t, -al ~ ~
era;~ ~ ~ tt ~ 3Wf ~ ~ ~ fm Isocost Line and Isoquant map. Now, if the input

prices decrease then how will the firm select its

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new input combination?
(\Cf) i@c fflf ~ ~ ~ era; tt .. ~
t~~~~~~.mt~ (c) What is meant by Economies and Diseconomies

of Scope? Explain with examples. . (5,5,5)

~I

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PART B
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~,
6. (a) Define the Productive Inputs Principle. Using
3. (a) Consider a situation where both income tax and
it, discuss the properties of Isoquants and quantity tax on x, generate same revenue for the
families of Isoquants. Use diagrams wherever government. Which tax will be relatively better

required. for the consumer? Show using a diagram.

(b) Draw an income offer curve and Engel curve for

(b) What is meant by Increasing and Decreasing
good x if both good x and good y are perfect
Returns to scale? What are the reasons for substitutes.

Increasing and Decreasing Returns to scale?

( c) Create a positive monotonic transformation for any
(10,5)
two commodities x and y with the help of the
Indifference curve.
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~, i, ~ ~ ~ cfir-f ~ cf){ 3N~ ~ mm?
3lR<cf cfif~ ~ -=,
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5. (a) Using a diagram show Certainty equivalent,
~I
expected consumption, risk premium if the

(-r) ~ ~ ~ ~ "ij" ~ ~ ii° ~3« X consumer's expected utility function indicates risk

~ y cfi ~ ~ ~cfil<ifltcfi in.flilPlcti q~a.., aversion.

~I
(b) Show using a diagram that an increase in the

overtime wage definitely increases the supply of

4. (a) Show using a diagram, Slutskys decomposition of
(10,5)
labour.
price effect into a substitution effect and Income

effect, if good x is an inferior good. (en) ~ ~ "cfiT ~ 3qqtflla1 ~ ~ "ij" ffl

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(b) Explain the concept of 'value of insurance'.
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