Unique Paper Code 2555
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Introductory MicroeconomicsJanuary 2025, paper 2555

BA (Programme) · 8 questions · 8 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. Supply, demand and market equilibrium (8 papers), Games and strategic interaction (8 papers), Externalities (8 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 20 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)
Scarcity, opportunity cost and the PPFBeing checked
(6)
(b)Showing with an example that trade can leave both sides better offasked 7דTrade can make everyone better off”. Give an example to prove it.(4)
(b)(2)The short-run trade-off between inflation and unemploymentasked 5×Explain the trade-off between inflation and unemployment.(4)
(c)The invisible hand of the marketasked 8×Explain the concept of “invisible hand”.(4)

2.

18 marks
· ~36 min
(a)Quantity falls 20% while revenue rises 10%: elastic or inelastic demand?asked 7×A change in price causes the quantity demanded of a good to fall by 20 percent, while the total revenue from that good rises by 10 percent. Is the demand curve elastic or inelastic? Explain.(6)
(b)(i)Mid-point price elasticity of demand for air tickets: business travellers and vacationersasked 7×Assume that business travellers and vacationers face the following demand for airline tickets from Delhi to Jaipur : (i) When the price of tickets goes up from $240 to $300, what will be the price elasticity of demand…(8)
(b)(ii)Why holiday travellers and business travellers respond differently to faresasked 7×Assume that business travellers and vacationers face the following demand for airline tickets from Delhi to Jaipur : (ii) Why might vacationers have a different elasticity than business travellers?(2)
(c)Cross-price elasticity of demand, with examplesasked 7×Explain the cross-price elasticity with an example.(2)

3.

18 marks
· ~36 min
(a)
Tax incidence, deadweight loss and subsidiesBeing checked
(6)
(b)Does more demand for notebooks leave the quantity supplied unchanged?asked 8דA rise in the demand for notebooks raises the quantity of notebooks demanded, though not the quantity supplied.” Is the statement true or false? Explain.(6)
(c)Are all Giffen goods inferior, and all inferior goods Giffen?asked 6×State whether each of the following statements is true or is false, and why. Explain your answers. (i) “All the Giffen goods are inferior goods.” (ii) “All the inferior goods are Giffen goods.”(6)

4.

18 marks
· ~36 min
(a)Showing how price ceilings and price floors change market outcomesasked 7×Show how a price ceiling and a price floor affect the market outcomes?(6)
(b)
Tax incidence, deadweight loss and subsidiesBeing checked
(8)
(c)A tariff and what it does to an importing countryasked 8×What is tariff and describe its economic effects?(4)

5.

18 marks
· ~36 min
(a)
Consumer and producer surplus, tariffs and quotasBeing checked
(8)
(b)(i)Priya's willingness to pay for the iPhoneasked 8×Priya buys an iPhone for $280 and gets consumer surplus of $200. (i) What is her willingness to pay?(2)
(b)(ii)Priya's consumer surplus if she had bought the iPhone on sale for $210asked 8×Priya buys an iPhone for $280 and gets consumer surplus of $200. (ii) If she had bought the iPhone on sale for $210, what would her consumer surplus have been?(4)
(b)(iii)Priya's consumer surplus if the iPhone cost $560asked 8×Priya buys an iPhone for $280 and gets consumer surplus of $200. (iii) If the price of an iPhone were $560, what would her consumer surplus have been?(4)

6.

18 marks
· ~36 min
(a)Public goods and common resources, defined with examplesasked 7×Define public goods and common resources with examples?(6)
(b)The free rider problemasked 7×Explain the free rider problem.(6)
(c)
ExternalitiesBeing checked
(6)

7.

18 marks
· ~36 min
(a)
Consumer choice: budget line and indifference curvesBeing checked
(8)
(c)
Consumer choice: budget line and indifference curvesBeing checked
(10)

8.

18 marks
· ~36 min
(a)Does every gain to a winner have to come at a loser's expense?asked 8×Write a brief note on what follows : (a) “Any Gain by the winner must harm the loser.” Is the statement true or false?(6)
(b)The tragedy of the commonsasked 7×Write a brief note on the following : (b) “Tragedy of Commons”.(6)
(c)
The Coase theoremBeing checked
(6)

— End of the paper —