0804 Eco (CFA520)

# 0804 Eco (CFA520) - Question Paper Economics(CFA520 April...

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1 Question Paper Economics (CFA520): April 2008 Answer all 74 questions. Marks are indicated against each question. Total Marks : 100 1. Which of the following statements is false ? (a) There exists a difference between demand and quantity demanded (b) In case of Giffen goods the demand curve slopes upwards from left to right (c) Quantity demanded is time sensitive because it is a flow concept (d) Increase in population decreases the quantity demanded (e) There will be a shift in the demand curve only when the quantity demanded at each level of price changes. (1 mark ) <Answe r> 2. The demand function of a monopolist is given as follows: P = 500 – 8Q If the marginal cost of the firm is MC = 9Q, the profit maximizing price of the firm is (a) Rs.320 (b) Rs.340 (c) Rs.360 (d) Rs.350 (e) Rs.355. (2 mark s) <Answe r> 3. The linear demand function of a commodity is given as P = 8 – Q. What will be the absolute value of price elasticity of demand when the price is Rs.6? (a) 0.8 (b) 0.9 (c) 2.0 (d) 1.0 (e) 3.0. (2 mark s) <Answe r> 4. What is the marginal revenue when the price is Rs. 80 per unit and the price elasticity of demand is 4? (a) Rs.45 (b) Rs.50 (c) Rs.60 (d) Rs.65 (e) Rs.70. (2 mark s) <Answe r> 5. A firm supplied 5,000 diaries at the rate of Rs. 20 per diary to an IT company. Later on the price per diary has increased to Rs. 35. Due to this the supply has increased to 6,500 units. What is arc price elasticity of supply? (a) 0.448 (b) 0.468 (c) 0.478 (d) 0.489 (e) 0.544. (2 mark s) <Answe r> 6. The demand function for a commodity is estimated as follows: Q d = 6,50,000 – 45P The arc price elasticity of demand between the prices of Rs. 5,000 and Rs. 6,000 is (a) – 0.615 (b) – 0.714 (c) – 0.748 (d) – 0.789 (e) – 0.864. (2 mark s) <Answe r>

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2 7. Which of the following statements is not true ? (a) Want satisfying power of a good is called as utility (b) There exists a difference between choice and preference (c) The concept of utility is developed to explain the basic principles of consumer choice and behavior (d) A rational consumer is one who allocates his spending in such a way that the preferred combination gives him the maximum satisfaction (e) According to ordinalist approach, the utility can be measured in subjective units. (1 mark ) <Answe r> 8. The quantity of a good is called as the ‘satiation quantity’, if the marginal utility of the good is (a) Equal to the total utility (b) Greater than the total utility (c) Negative (d) Equal to zero (e) Maximum. (1 mark ) <Answe r> 9. The reason why a consumer pays zero or a very low amount of money for certain items with high benefits is explained by (a) Law of demand (b) Law of variables proportions (c) Consumer surplus (d) Producer’s surplus (e) Paradox of value. (1
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## This note was uploaded on 07/20/2010 for the course ICFAI CFA taught by Professor Cfa during the Fall '09 term at Indian School of Business.

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0804 Eco (CFA520) - Question Paper Economics(CFA520 April...

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