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Neoclassical Economic Orthodoxy - Principles of Microeconomics - Exam, Exams of Microeconomics

Netaji Subhas Institute of TechnologyMicroeconomics

Neoclassical Economic Orthodoxy, Factors of Production, Production Function, Marginal Product, Average Product, Diseconomies of Scale, Assumptions of Consumer Preferences. Above points are representatives for questions of Principles of Microeconomics given in this past exam paper.

Typology: Exams

2011/2012

Uploaded on 11/29/2012

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1
Ollscoil na hÉireann, Gaillimh
National University of Ireland, Galway
Repeat Examinations 2008/2009
Exam Code(s)
1BA1, 1BA11, 1BA6, 1BA7, 1BCS1, 1BCW1, 1BFS1,
1BGL1,1BHR1, 1BIS1, 1BTP1, 1BWM1, 1BWM1, 1EM1,
1OA1
Exam(s)
1st B.A., 1st B.A. (Hist.), 1st B.A. (PSP), 1st B.A. (Psych.), 1st
B.A. (Child St.), 1st B.A. (Creat. Writ.), 1st B.A. (Film St.),
B.A. (Gaeilge & Leann an Aist.), 1st B.A. (Human Rights),
1st B.A. (Irish St.), 1st B.A. (Theatre & Perform.), 1st B.A.
(Women St.), Erasmus, Occasional
Module Code(s)
EC135
Module(s)
Principles of Microeconomics
Paper No.
Repeat Paper
1
External Examiner(s)
Professor Robert Wright
Internal Examiner(s)
Professor Eamon O’Shea
Dr. Gerard Turley
Instructions:
There are three sections to be answered. Students are required to
answer all questions in Section A (20 marks) on the MCQ answer
sheet provided, any five questions in Section B (15 marks) and
any three questions in Section C (45 marks). Please note that
there is no negative marking in Section A.
2 hours
MCQ + minimum of one answer book
Economics
G. Turley
Requirements:
MCQ
Yes
Handout
Statistical Tables
Graph Paper
Log Graph Paper
Other Material
pf3
pf4
pf5

Partial preview of the text

Download Neoclassical Economic Orthodoxy - Principles of Microeconomics - Exam and more Exams Microeconomics in PDF only on Docsity!

Ollscoil na hÉireann, Gaillimh

National University of Ireland, Galway

Repeat Examinations 2008/

Exam Code(s) 1BA1, 1BA11, 1BA6, 1BA7, 1BCS1, 1BCW1, 1BFS1,

1BGL1,1BHR1, 1BIS1, 1BTP1, 1BWM1, 1BWM1, 1EM1,

1OA

Exam(s) 1

st

B.A., 1

st

B.A. (Hist.), 1

st

B.A. (PSP), 1

st

B.A. (Psych.), 1

st

B.A. (Child St.), 1st^ B.A. (Creat. Writ.), 1st^ B.A. (Film St.),

B.A. (Gaeilge & Leann an Aist.), 1st^ B.A. (Human Rights),

1 st^ B.A. (Irish St.), 1st^ B.A. (Theatre & Perform.), 1st^ B.A.

(Women St.), Erasmus, Occasional

Module Code(s) EC

Module(s) Principles of Microeconomics

Paper No.

Repeat Paper 1

External Examiner(s) Professor Robert Wright

Internal Examiner(s) Professor Eamon O’Shea

Dr. Gerard Turley

Instructions: There are three sections to be answered. Students are required to

answer all questions in Section A (20 marks) on the MCQ answer

sheet provided, any five questions in Section B (15 marks) and

any three questions in Section C (45 marks). Please note that

there is no negative marking in Section A.

Duration 2 hours

No. of Answer Books MCQ + minimum of one answer book

Department(s) Economics

Course Co-ordinator(s) G. Turley

Requirements :

MCQ Yes

Handout

Statistical Tables

Graph Paper

Log Graph Paper

Other Material

SECTION A (20 marks)

Answer all questions (no negative marking). Please use the MCQ answer sheet provided

  1. In neoclassical economic orthodoxy, firms are assumed to (a) maximise sales; (b) maximise profits; (c) minimise industrial strife; (d) maximise growth; (e) minimise trade union power.
  2. A technological improvement lowers the cost of producing coffee. At the same time, a study is published which states that coffee drinking causes heart disease. In response to these ‘events’, the new equilibrium quantity of coffee will (a) rise; (b) fall; (c) remain the same; (d) rise or fall, depending on the relative shifts of the demand and supply curves; (e) none of the above.
  3. Suppose the market for milk is described by the following equations: Qd = 150 - P Qs = - 50 + P where Q = quantity (litres of milk per day) P = price (cents) Further, suppose the government implements a price floor at P = 120. What can we predict will happen in this market? (a) There will be shortage of 70 litres; (b) The market will clear; (c) There will be a surplus of 70 litres; (d) There will be a surplus of 40 litres; (e) It is impossible to say with the information given.
  4. All inferior goods have income elasticities of demand (a) greater than one; (b) between zero and one; (c) between minus one and zero; (d) less than zero; (e) none of the above.
  5. A pair of gloves is likely to have a (a) high and negative value for cross-price elasticity; (b) high and positive value for cross-price elasticity; (c) low and positive value for cross-price elasticity; (d) low and negative value for cross-price elasticity; (e) zero cross-price elasticity.
  6. The income effect of a price change (a) varies with the type of good; (b) is the change in supply arising from the income change alone; (c) is the change in demand when real income changes; (d) both (a) and (c) above; (e) none of the above.

SECTION C (45 marks)

Answer any three (and only 3) questions

1 (a) (3 marks) List and explain any three key concepts in mainstream economics. (b) (8 marks) The market for wine in New Zealand is in equilibrium. Beer is a close substitute for wine; cheese and wine are complements. Use demand and supply diagrams to analyse the effect of each of the following (separate) events on the equilibrium price and quantity traded in the New Zealand wine market. Assume that all of the ceteris paribus assumptions hold except for the event listed. i. The income of consumers falls (wine is a normal good); ii. Early frost destroys a large part of the world grape crop; iii. A new churning invention reduces the cost of producing cheese; iv. Costs of producing beer and wine increase dramatically. NB: Use four separate diagrams. (c) (4 marks) Using the demand and supply model, explain one of the following: the (2006-2008) fall in house prices in Ireland OR the 2007/2008 global rise in oil prices In your answer please identify factors as either demand-side or supply-side.

2. (a) (2 marks) Explain the concept ‘price elasticity of demand’. What are the factors that determine the price elasticity of demand? (b) (7 marks) What sign (positive or negative) would you expect the coefficient of elasticity to be for the following? i. income elasticity for a normal good ii. cross-price elasticity for two substitutes iii. price elasticity for a Giffen good iv. income elasticity for a luxury good v. price elasticity for an inferior good vi. cross-price elasticity for two complements vii. income elasticity for a necessity (c) (6 marks) Table 1 below reports elasticities of demand. Interpret the results in terms of the values for the price and cross-price elasticities. Table 1 : Elasticities % Change in quantity Caused by a one % price change in demanded of Food Clothing Travel Food - 0.4 0 0. Clothing 0.1 - 0.5 - 0. Travel 0.3 - 0.1 - 0.

3. (a) (3 marks) What are the assumptions of consumer preferences? (b) (6 marks) Kieran’s income is €50. A pint (of Carlsberg) costs €5 and a coffee costs €2. i. Draw the budget line. (1) ii. On the same graph, draw an indifference curve so that the best affordable point corresponds to six pints of Carlsberg and ten coffees. (1) iii. If the price of Carlsberg falls to €4, draw the new budget line. (2) iv. If the price of coffee increases to €2.50, draw the new budget line. (2) (c) (6 marks) Using the substitution effect and income effect analysis, explain why the demand curve for a normal good slopes downward. 4. (a) (6 marks) Explain the following production terms i. factors of production ii. production function iii. marginal product iv. law of diminishing returns v. average product vi. diseconomies of scale (b) (9 marks) Please copy Table 2 into your Answer book and answer the questions that follow. Assume that capital (machinery) and labour (workers) cost €25 per unit, per day. Table 2: A Firm’s Costs Units Total Cost Average Cost Capital Labour Qutput TFC TVC TC AFC AVC ATC MC 1 0 0 1 1 4 1 2 10 1 3 13 1 4 15 1 5 16 i. Complete the table. (7) ii. Is this in the short-run or long-run? Explain your answer. (2) 5. (a) (8 marks) In a competitive market, the short-run supply curve for a firm is its short-run marginal cost curve above the shutdown price. Explain. Use appropriate diagrams where necessary. (b) (7 marks) Explain and illustrate, using an appropriate diagram, the short-run equilibrium position for the monopolist.