Unique Paper Code 2070
Revised 0 of 10

Introductory MicroeconomicsJanuary 2025

BA (Hons) Economics · 7 questions · 11 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. 3 numerical parts and 16 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)Positive and normative economics, and two statements classifiedasked 3×Distinguish between normative economics and positive economics. Is each of the following statement positive or normative? (i) The annual GDP growth rate should be 6%. (ii) More subsidies will raise the overall…(4)
(b)Is a trade good for one person always good for the other?asked 4×"A certain trade that is good for one person is always good for the other one." Is that statement correct? Explain your reasoning.(4)
(c)
Scarcity, opportunity cost and the PPFBeing checked
(10)

2.

18 marks
· ~36 min
(a)
Consumer and producer surplus, tariffs and quotasBeing checked
(6)
(b)How far the price of salt must rise to cut its consumption by a quarterasked 4×Suppose the price elasticity of demand for salt is roughly 0.5. If one kg of salt currently costs 60 and the government wants to reduce its consumption by 25 percent, by how much should it increase the price?(6)
(c)Cross price elasticity of X with respect to Y by the mid-point methodasked 4×With the information given in the table below, calculate the cross price elasticity of good X with respect to Y (by the mid-point method). How are these two goods related? Comment on it.(6)

3.

18 marks
· ~36 min
(a)
Consumer and producer surplus, tariffs and quotasBeing checked
(8)
(b)A price floor set below the equilibrium priceasked 4×What is a price floor? What will the effect be on the market outcome if the government sets a price floor on a commodity at a price that is below its equilibrium price?(4)
(c)
Supply, demand and market equilibriumBeing checked
(6)

4.

18 marks
· ~36 min
(a)
Tax incidence, deadweight loss and subsidiesBeing checked
(6)
(b)Burden of a sugar tax with very elastic supply and very inelastic demandasked 4×If the sugar market has very elastic supply and very inelastic demand, how will the burden of a tax on sugar be divided between consumers and producers?(4)
(c)
Consumer choice: budget line and indifference curvesBeing checked
(8)

5.

18 marks
· ~36 min
(a)Public goods and common resources; the main reason for market failureasked 4×Distinguish between a public good and a common resource, with examples. What is the main reason for market failure?(6)
(b)
Corrective taxes, and whether they protect the environment better than regulationsBeing checked
(6)
(c)
ExternalitiesBeing checked
(6)

6.

18 marks
· ~36 min
(a)Games of strategy, with examplesasked 4×What is game of strategy? Give some examples.(4)
(b)
Consumer choice: budget line and indifference curvesBeing checked
(6)
(c)How a rise in the wage can reduce the amount a person wants to workasked 3×Explain how a rise in the wage can potentially reduce the amount that a person wants to work.(8)

7.

18 marks
· ~36 min
(a)
Consumer and producer surplus, tariffs and quotasBeing checked
(6)
(b)
Actions players can take to address asymmetric informationBeing checked
(4)
(c)A ₹32 tax on sellers of soap: new equilibrium, prices and deadweight lossasked 4×The market for soap is given by the following supply and demand functions: Qs = 3P and Qd = 160 – P where P is the price of soap. Compute the equilibrium price and quantity of soaps. Suppose a tax of ₹32 is levied on…(8)

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