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Micro Econmics pyq

The document outlines a continuous assessment for a BA Programme in Intermediate Microeconomics, consisting of four questions related to budget lines, consumer preferences, marginal rates of substitution, and utility functions. It includes specific inquiries about the effects of price changes on budget lines, the impact of taxes and subsidies on budget equations, and the properties of indifference curves. Additionally, it addresses the transitivity and completeness of certain relations and requires interpretation of a utility function based on commuter data.

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Dev Pratap Singh
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6 views1 page

Micro Econmics pyq

The document outlines a continuous assessment for a BA Programme in Intermediate Microeconomics, consisting of four questions related to budget lines, consumer preferences, marginal rates of substitution, and utility functions. It includes specific inquiries about the effects of price changes on budget lines, the impact of taxes and subsidies on budget equations, and the properties of indifference curves. Additionally, it addresses the transitivity and completeness of certain relations and requires interpretation of a utility function based on commuter data.

Uploaded by

Dev Pratap Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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20 marks

Continuous Assessment
BA Programme 3rd Semester Section G
Intermediate Microeconomics

Question 1. Answer the following questions :

1. If the price of good 1 doubles and the price of good 2 triples, does the budget line become
flatter or steeper? (1 marks)

2. Suppose that a budget equation is given by p1 x1 + p2 x2 = m. The government decides


to impose a lump-sum tax of u, a quantity tax on good 1 of t, and a quantity subsidy on
good 2 of s. What is the formula for the new budget line? (2 marks)

3. If the income of the consumer increases and one of the prices decreases at the same time,
will the consumer necessarily be at least as well-off? (3 marks)

Question 2. Answer the following questions:

1. Draw indifference curves when good 1 is a ”neutral”, using arrows to show the direction
of increased preference. What is the Marginal Rate of Substitution (MRS) at all points
of this indifference curve? (2 marks)

2. What is your marginal rate of substitution of $1 bills for $5 bills? (1 mark)

3. Consider a group of people A, B, C and the relation “at least as tall as,” as in ”A is at
least as tall as B.” Is this relation transitive? Is it complete? (2 marks)

Question 3. From the observed choice behaviour of a consumer, we cannot infer about her
Marginal Utility (MU) but we can infer her MRS. True or False? Elucidate. (5 marks)

Question 4. Suppose we estimate the following utility function using the data for a group
of commuters

U (T W, T T ) = −0.147T W − 0.0411T T

where
TW = total walking time to and from bus or car
TT = total time of trip in minutes.
what would you call the ratio of the coefficient of TW to the coefficient of TT. Give its inter-
pretation. (4 marks)

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