Unique Paper Code 537
Revised 0 of 12

Introductory MicroeconomicsDecember 2023

BA (Hons) Economics · 7 questions · 9 parts still being checked

Duration: 3 HoursMaximum Marks: 90

Reworded by Kunji from the printed paper. The original paper belongs to the University of Delhi. See DU's question bank.

Before you start

  1. This paper. Attempt any five questions. All questions carry equal marks.
  2. Most asked here. Tax incidence, deadweight loss and subsidies (4 papers), Supply, demand and market equilibrium (4 papers), Scarcity, opportunity cost and the PPF (4 papers). These come back almost every year, so learn them first. The asked N× note beside each part counts the DU papers that set its topic.
  3. Numbers and theory. 4 numerical parts and 11 theory parts. Numericals take longer to lay out, so give them your freshest time.
  4. Pace. Two minutes a mark: about 36 minutes for each 18-mark question, with nothing spare in 3 hours. Move on when the time is up.
  5. Keep score. Every part opens a worked answer checked against the books. Turn the key when you have revised it; the boxes at the top fill in, on this device.

1.

18 marks
· ~36 min
(a)
Gains from trade and comparative advantageBeing checked
(6)
(b)Positive and normative statements, and three statements classifiedasked 3×Distinguish between a normative and a positive statement. Are the statements given below positive or normative? (i) The introduction of a minimum-wage law causes unemployment in the labour market. (ii) The unemployment…(6)
(c)
Scarcity, opportunity cost and the PPFBeing checked
(6)

2.

18 marks
· ~36 min
(a)Elasticities of demand and supply at the equilibrium of Qd = 96 – 6P and Qs = –12 + 3Pasked 4×Calculate the elasticity of demand and the elasticity of supply at the equilibrium price for the demand and supply function given below : Qd = 96 – 6P; Qs = – 12 + 3P(6)
(b)
Supply, demand and market equilibriumBeing checked
(6)
(c)What decides the elasticity of demand, and the price rise needed to cut the use of good X by 20 per centasked 4×Which factors influence the elasticity of demand for any good? Assume that the price elasticity of demand for good X is roughly 0.2 and that its present price is 50. By how much should the government raise the price if…(6)

3.

18 marks
· ~36 min
(a)Equilibrium in the apple market and a statutory minimum price of ₹75asked 4×The demand (Q~d~) and the supply (Q~s~) for apple are given as follows: Q~d~ = 176 – 2P; Q~s~ = –16 + P Calculate the equilibrium price and the quantity of apples. The government has passed a law that sets a statutory…(6)
(b)Two statements on complements and on drought and farm revenueasked 4×Explain whether each of the statements below is true or false. (i) Pizza and cold drink are regarded as complementary goods; if the price of pizza falls, the quantity demanded for both goods will increase. (ii) A…(6)
(c)
When a price floor does not bind, and a binding floor in the wheat marketBeing checked
(6)

4.

18 marks
· ~36 min
(a)Tables: equilibrium, a tax of 48 levied on buyers, and the deadweight lossasked 4×Consider a market for tables that is described by these supply and demand functions : Q~S~ = 3P; Q~D~ = 240 – P. Calculate the equilibrium price and the equilibrium quantity of tables. Assume that a tax of 48 is levied…(6)
(b)The tragedy of the commons, and higher rush-hour fares on the Kolkata Metroasked 4×What is meant by the Tragedy of Commons? Suppose Kolkata Metro plans to charge higher fares in rush hours than during the rest of the day. Why does it propose such a plan?(6)
(c)Market-based policies to remove the inefficiency caused by externalitiesasked 4×Explain in detail the market based policies that the government can use to solve the problem of inefficiency that is caused by externalities.(6)

5.

18 marks
· ~36 min
(a)Brazil's television market: surplus changes when the world price falls by ₹120asked 4×Assume Brazil is an importer of televisions and that there are no trade restrictions. Brazilian consumers buy 15,000 televisions per year, of which 6,000 are produced domestically and 9,000 are imported. Suppose that a…(6)
(b)Price elasticity versus cross-price elasticity, and the burger-noodles estimateasked 4×Distinguish between price and cross-price elasticity of demand. Suppose a rise in the price of burger from ₹50 to ₹55 per unit results in an increase in demand for noodles from 150 units to 180 units. Estimate the cross…(6)
(c)Externalities, with examples, and internalising the externality from educationasked 4×Explain the concept of externality with the help of examples. How can the government try to internalize the externality that education causes?(6)

6.

18 marks
· ~36 min
(a)Deadweight loss, tax revenue and the size of a tax, and taxing a good with inelastic demandasked 4×Investigate the relationship between the deadweight loss from tax, tax revenue and tax size. Can the government increase its revenue by imposing a tax on a good whose demand is inelastic?(6)
(b)
ExternalitiesBeing checked
(6)
(c)
Income elasticity of demand for apples by the mid-point methodBeing checked
(6)

7.

18 marks
· ~36 min
(a)
Payoff and equilibrium in games of strategyBeing checked
(6)
(b)
How an import tariff changes producer, consumer and total surplus, and the arguments for restricting tradeBeing checked
(6)
(c)
Supply, demand and market equilibriumBeing checked
(6)

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