This document contains 60 multiple choice and short answer questions related to microeconomics concepts. The questions cover topics such as positive economics, production possibility curves, opportunity cost, consumer equilibrium, elasticity, costs of production, revenue, and market equilibrium under different market structures.

1. Micro economicsquestionssetwww.eakanchha.com
Q1. What is positive economics?(1mark)
Q2. Positive statementsare the statementsof truth.(True /false)?(1mark)
Q3. Massive unemploymentshiftsthe PPCtothe left?Doyou agree withthisstatement?Justifyyour
answer. (4 marks)
Q4. If PPCrelatedtowheatand rice (onX axisand Y axisrespectively)explainanddraw a diagram
showingchange inPPCwhenresourcesremainconstantandtechnologyimprovesonlyforwheat? (3
marks)
Q5. Explaintransformationboundary?(6marks)
Q6. Althoughwaterisuseful,yetitischeap.Onthe contrary diamondisnotmuch of use still itisvery
expensive.Give aneconomicreasonforthisparadox?(2marks)
Q7. The followingtable depictsthe productionpossibilitiesof commoditiesXandY: (5 marks)
possibility A B C D E F
Commodity X 0 1 2 3 4 5
Commodity Y 20 14 9 5 2 0
a) Showthese productionpossibilitiesthroughPPF.Whatdothe pointson the curve indicate?
b) Label a pointG inside the curve.Whatdoesthispointindicate?
c) Label a pointH outside the curve.What doesthispointindicate?
d) What mustoccur so thatthe economycanattain the level of productionasindicatedbypoint
H?
e) FindMOC, and commentonthe shape of PPF?
Q8. Central problemsare foundonlyinthe developingcountrieslike IndiaandBangladeshandnotin
developedcountrieslikeUSA?(True /false)?(1mark)
Q9. Explainthe central problemof “choice of technique”?(3marks)
Q10. What isan opportunitycostof an inputwhichhas noalternative use?(1mark)
Q11. Give an example of growthof resources?(1mark)
Q12. Whyeconomicsisconsideredasocial science?(2marks)
Q13. Hiteshbuyspizzaandcoke.The MU of last piece of pizzais80 Utilsand of lastsipof coke is40
Utils.The price of pizzaisRs.40 and that of coke is Rs.20. Thismeansthat Hiteshisbuying:(1mark)
a) More pizzaand lesscoke.
b) More coke and lesspizza.
c) Both at optimal level.
d) Same quantityof both.

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Q14. Utilityisdirectlylinkedwiththe usefulnessof acommodity?True /false.(1 mark)
Q15. Howwouldyouas a consumerreactto the situationwhenthe slope of yourindifferencecurve is
greaterthan the slope of yourbudgetline?(4marks)
Q16. Rahul consumestwocommoditiesXandY whose pricesare Rs.8and Rs.12 perunit. And itsMU
formX is 3 and MU fromY is 2. Is Rahul is at equilibrium?If not,thanwhathe will dotoreach
equilibrium. (3marks)
Q17. Complete the following:(2marks)
Unit 1 2 3 4 5
TU 50 90 140 150
MU 30
Q18. SatishhasRS.88 withhim.He intendedtopurchase goodsXand Y withhismoney.The market
price of Xand Y perunitis Rs.8. The MU schedulesof goodXandgood Y is givenbelow.Findouthow
manyunitsof X andY shouldsatishpurchase sothat he will getmaximumsatisfaction?(4marks)
Units MU of X MU of Y
1 80 40
2 70 36
3 64 24
4 56 20
5 48 16
6 40 12
7 32 8
8 24 4
9 16 0
10 8 0
Q19. State Gossen’sfirstlawof consumptionwithany5 assumptions?(6marks)
Q20. Can twoindifferencecurvespassthroughagivenpointonan indifference map?Justifyyour
answer.(3 marks)
Q21. Explainmonotonicpreference?(1mark)
Q22. Ice cream sellsforRs.20. Sam wholikesice cream, hasalreadyconsumed4units.HisMU of one
rupee is4 utils.Shouldhe consume more ice creamorstopthe consumption?Explain.(3marks)
Q23. ExplainMRS?(2 marks)
Q24. Whenthe price of exportable fallsinthe domesticmarketandexportstendstoraise,ourexport
receiptsfail toshowrise.Why?
Or;
Evenwhentax is raisedoncigarettes,theirconsumptioncontinuestobe high.How doyou explainthis
fact? (2 marks)
Q25. Doesa fall inincome have same effectondemandforthe givencommodity? (3marks)

3. Micro economicsquestionssetwww.eakanchha.com
Q26. Derive lawof demandaccordingtosingle commodity equilibriumcondition? (4marks)
Q27. True/False:
a) Increase inprice of bulbswill shiftitsdemandcurve towardsleft?(1mark)
b) Demandcurve of pepsi will notshiftwithrise orfall initsprice?(1mark)
c) Demandcurve for automobilesshifttowardsright due toopeningupof a new automobile
dealerinthe town?(1 mark)
d) In case of giffengoods,demandcurve slopesupwards?(1mark)
Q28.
Explainelasticitywithexample anddiagramatline 1, 2 and4? (6 marks)
Q29. Explainthe effectsof followingfactorsonelasticityof demand?(3marks)
a) Availabilityof substitutes.
b) Level of price.
Q30. Whenprice of a commodityfallsbyRs.1perunit,itsquantitydemandedrisesby3units.Itsprice
elasticityof demandis2.Calculate itsoriginal quantitydemandedif the price before the change was
Rs.10 perunit? (3 marks)
Q31. FindEd: if (a) demandcurve is:DX =10+2P. Slope of demandcurve is -2 and price = 5 perunit?
(b) Demandcurve is: DX =20-2P. Slope of demandcurve is -2 and demand= 10 units? (5 marks)
Q32. Can APrise whenMP starts declining?True/false (1mark)
Q33. Explainlawof returnto factor withitsassumptions,exampleandgraph?(6 marks)
Q34.why increasingreturntoscale occurs?Alsoexplainitstwotypes?(3marks)
Line1
Line2
Line3
Line4
Line5

4. Micro economicsquestionssetwww.eakanchha.com
Q35. Findthe missingvalues:(5marks)
V.F 0 1 2 3 4 5 6 7
TP 25
AP 5
MP 8 4 5 0 - 4
Q36. Explainthe relationshipbetweenTC,TFCand TVC? (4 marks)
Q37. WhyAFC doesnottouch any of the axes?(2 marks)
Q38.Identifyimplicitcostandexplicitcostineachof the individualcases:(2marks)
a) A producerborrowsmoneyandopensa shop.The shoppremise isownedbyhim.
b) A farmertakesa farm on rentand carrieson farmingwiththe helpof familymembers.
Q39. Calculate (a) explicitcost(b) implicitcost:(2marks)
Particulars Amount (Rs. In thousands)
1. Investment in fixed assets. 2000
2. Borrowings at 12% interest per annum. 1500
3. Wages paid during the year. 120
4. Annual rental value of the owner’s factory building. 100
5. Annual depreciation. 100
6. Estimated annual value of the management services of owner. 240
Q40. Findmissingvalues:(4marks)
OUTPUT AVC TC MC
1 60 20
2 18
3 18
4 20 120
5 22
Q41. What isthe relationshipbetweenAVCand MC?(1 marks)
Q42. ExplainLVPwithitsassumptions?(5marks)
Q43. Can APrise whenMP starts declining?True/false (1mark)
Q44. Explainthe relationshipbetweenACandMC? (3 marks)

5. Micro economicsquestionssetwww.eakanchha.com
Q45. Complete the followingtable:(5marks)
Output 1 3
TVC 10 27
AVC 8 10
MC 6 13
Q46. The two inverselyS- shapedshortruncost curvesare parallel toeachother andmaintaina
constantdistance of Rs.50. whichcost is indicatedbyRs.50?Also,identifythe twoinverselyS- shaped
short runcost curve?(2 marks)
Q47. Explainthe relationshipbetweenARandMR whenprice fallswithrise inoutput.Alsodraw the
figure?(3marks)
Q48. Complete the followingtable:(3marks)
Output price MR TR
1 16
2 12 24
3 6
4 7 28
Q49. Explainthe condition of producer’sequilibriumwithfigurewhenprice fallswithrise inoutput?(3
marks)
Q50. Fromthe followinginformationaboutaproducerfindoutthe level of outputatwhichhe will be in
equilibrium: (3marks)
Output 1 2 3 4 5
Price 10 9 8 7 6
MC 10 6 3 4 7
Q51. The coefficientof elasticityof supplyof acommodityis3. A sellersupplies20unitsof this
commodityata price of Rs.8 per unit.How much quantityof thiscommoditywill the sellersupplywhen
the price risesby Rs.2 perunit?(3 marks)
Q52. Explainanytworeasonswhythe supplyof a commodityexpandsasthe price rises?(4marks)
Q53. Explainthe implicationof followinginthe perfectcompetition:(4marks)
a) Homogeneousproduct.
b) Perfectknowledge amongbuyersandsellers.
Q54. Compare demandcurve undermonopolyandmonopolisticcompetition?(5marks)

6. Micro economicsquestionssetwww.eakanchha.com
Q55. Pricesof raw material have beenincreased.Describe the chainof effectsof thischange inthe
market?(6 marks)
Q56. Explainthe conceptof price ceiling.Alsoexplainits consequence andRationingsystem?(6marks)
Q57. What will be the effectonequilibriumprice andequilibriumquantitywhenincome increasesin
case of normal goods?(1 mark)
(a) Both equilibriumprice andquantityfalls.
(b) Both equilibriumprice andquantityrise.
(c) Equilibriumprice will riseandequilibriumquantitywill fall.
(d) Equilibriumprice will fall andequilibriumquantitywill rise.
Q58. What isthe price elasticityof supplyof acommoditywhose straightline supplycurve passes
throughthe originforminganangle of 75⁰? (1 mark)
Q59. A firmwill be able tosell anyquantityof agood at a givenprice.The firm’smarginal revenuewill
be:
(a) Greaterthan AR (b) lessthanAR (c) Equal to AR(d) Zero (1 mark)
Q60. The individual demandandsupply functionof aproductare givenas:Dx=10-2Px, Sx= 20+2Px,
where Px standsforprice and Dx and Sx respectivelystandsforquantitydemandedandquantity
supplied.If there are 4000 consumersand1000 firmsinthe market,thenquantitydemandedand
suppliedatthe equilibriumprice of Rs.2:(1 mark)
(a) 20000 (b) 22000 (c) 21000 (d) 24000