Principles of Microeconomics

Created by N Niranjan Das

For 1 Mark

Unit-1
2021

1. Demand for a commodity is always related with its _____. (Fill in the blank) [1 Mark]

2. What do you mean by a normal good? [1 Mark]

3. If the demand curve is parallel to the x-axis, the price elasticity of demand is _____.
(Fill in the blank) [1 Mark]

4. What is elasticity of supply? [1 Mark]

5. When does the supply curve become a vertical straight line? [1 Mark]

2022

1. Why does the demand curve shift? [1 Mark]

2. What does demand mean in economics? [1 Mark]

3. Mention any two determinants of supply. [1 Mark]

4. What is a normal good? [1 Mark]

5. Draw a normal supply curve. [1 Mark]

2023

1. What is derived demand? [1 Mark]

2. Name two factors influencing elasticity of demand. [1 Mark]

3. Define elasticity of supply. [1 Mark]

4. What is complementary good? [1 Mark]

5. What do you mean by supply schedule? [1 Mark]

Principles of Microeconomics 1
 Unit-2
2021

1. Distinguish between cardinal utility and ordinal utility. [1 Mark]

2. Define indifference map. [1 Mark]

3. Whose name is associated with indifference curve analysis? [1 Mark]

4. What is the price line? [1 Mark]

5. An indifference curve is _____ to the origin. (Fill in the blank) [1 Mark]

2022

1. Define the term 'utility'. [1 Mark]

2. What is the marginal rate of substitution (MRS)? [1 Mark]

3. What is a budget line? [1 Mark]

4. Define price effect. [1 Mark]

5. Whose name is associated with cardinal utility? [1 Mark]

2023

1. Who introduced the concept of indifference curve? [1 Mark]

2. Write down the budget equation. [1 Mark]

3. Define price consumption curve. [1 Mark]

4. Mention two criticisms of law of demand. [1 Mark]

5. Define utility. [1 Mark]

Unit-3
2021

1. What is a production function? [1 Mark]

2. What is an isoquant? [1 Mark]

3. The law of variable proportion explains production function in the short/long period.
(Choose the correct option) [1 Mark]

4. Total cost is the summation of _____ plus _____. (Fill in the blanks) [1 Mark]

Principles of Microeconomics 2
 5. The SAC curve is also called the envelope/plant curve. (Choose the correct option) [1
Mark]

2022

1. What is the production function? [1 Mark]

2. Give one example of internal economies. [1 Mark]

3. Define cost. [1 Mark]

4. What is the shape of the short-run average cost curve? [1 Mark]

5. Give one example of a variable factor. [1 Mark]

2023

1. Define production. [1 Mark]

2. Give one example of short-run production function. [1 Mark]

3. Define implicit cost. [1 Mark]

4. Can there be some fixed costs in the long run? [1 Mark]

5. When total production becomes maximum? [1 Mark]

Unit-4
2021

1. Define perfect competition. [1 Mark]

2. Marginal revenue and average revenue curves coincide in which market? [1 Mark]

3. The firms in a perfectly competitive market are price takers/price makers. (Choose the
correct option) [1 Mark]

4. Who wrote "The Theory of Monopolistic Competition"? [1 Mark]

5. With which type of market is the concept of group equilibrium associated? [1 Mark]

2022

1. Mention any two features of perfect competition. [1 Mark]

2. What is the shape of the long-run supply curve for a constant cost industry under
perfect competition? [1 Mark]

Principles of Microeconomics 3
 3. Mention the equilibrium conditions of a firm under monopoly in the short-run. [1
Mark]

4. What is price discrimination? [1 Mark]

5. What is collusive oligopoly? [1 Mark]

2023

1. Who introduced the concept of monopolistic competition? [1 Mark]

2. What do you mean by dead weight loss in monopoly? [1 Mark]

3. Define normal profit. [1 Mark]

4. Name the demand curve of firm under perfect competition. [1 Mark]

5. Define long run. [1 Mark]

Unit-5
2021

1. The theory of distribution is a special case of the theory of price. (Write True or False)
[1 Mark]

2. Demand for factors of production is called direct demand/derived demand. (Choose the
correct option) [1 Mark]

3. What is the value of the marginal product (VMP)? [1 Mark]

4. Factors other than land earn rent if their supplies are less than perfectly elastic. (Write
True or False) [1 Mark]

5. Quasi-rent is a short-run phenomenon. (Write True or False) [1 Mark]

2022

1. What are the principal factors of production in economics? [1 Mark]

2. Give an example of derived demand. [1 Mark]

3. What is marginal physical product (MPP)? [1 Mark]

4. Define marginal revenue product (MRP). [1 Mark]

5. What is economic rent? [1 Mark]

Principles of Microeconomics 4
 2023

1. What do you mean by factor pricing? [1 Mark]

2. Define marginal land. [1 Mark]

3. What is subsistence wage? [1 Mark]

4. What is quasi-rent? [1 Mark]

5. Mention the name of remuneration of the factors of production. [1 Mark]

For 2 Marks

Unit-1
2020

1. Distinguish between (a) extension and increase in demand, and (b) contraction and
decrease in demand.

2. What is equilibrium price?

3. What do you mean by Giffen goods?

4. Mention any two factors that influence the elasticity of supply for a commodity.

2021

1. Distinguish between the expansion of demand and increase in demand. [2 Marks]

2. What is market equilibrium? [2 Marks]

2022

1. What is market equilibrium? [2 Marks]

2. State the law of supply. [2 Marks]

2023

1. Mention two assumptions of the law of supply. [2 Marks]

2. State the law of demand. [2 Marks]

Unit-2

Principles of Microeconomics 5
 2020

1. Distinguish between cardinal utility and ordinal utility.

2. What is marginal rate of substitution?

3. Define budget line of a consumer.

4. State the necessary and sufficient conditions for consumer equilibrium.

2021

1. Define the marginal rate of substitution. [2 Marks]

2. Define the income effect. [2 Marks]

2022

1. What is consumer's equilibrium? [2 Marks]

2. Write any two criticisms of the law of demand. [2 Marks]

2023

1. Why is the indifference curve downward sloping? [2 Marks]

2. Define marginal utility. Give one example. [2 Marks]

Unit-3
2020

1. What is meant by short run and long run in production theory?

2. Define an isoquant and an isoquant map.

3. What is opportunity cost?

4. Distinguish between fixed cost and variable cost.

2021

1. What is the isocost line? [2 Marks]

2. Make a distinction between explicit cost and implicit cost. [2 Marks]

2022

1. What is diseconomies of scale? Give an example. [2 Marks]

Principles of Microeconomics 6
 2. Write any two differences between fixed cost and variable cost. [2 Marks]

2023

1. What is the difference between economies and diseconomies of scale? [2 Marks]

2. Explain why isoquant is downward sloping. [2 Marks]

Unit-4
2020

1. Write two differences between monopoly and monopolistic competition.

2. Point out two important characteristics of oligopoly market.

3. Define price discrimination.

4. What do you mean by Prisoner's Dilemma?

2021

1. Mention two important conditions of equilibrium of a firm. [2 Marks]

2. Write two features of monopolistic competition. [2 Marks]

2022

1. What is product differentiation? [2 Marks]

2. Write any two characteristics of the oligopoly market. [2 Marks]

2023

1. What is the difference between collusive and non-collusive oligopoly? [2 Marks]

2. Why is AR=MR under perfect competition? [2 Marks]

Unit-5
2020

1. Write two determinants of the demand for a variable input.

2. Why is demand for an input termed as 'derived demand'?

3. Distinguish between differential and scarcity rent.

4. What do you mean by economic rent?

Principles of Microeconomics 7
 2021

1. What is the functional distribution of income? [2 Marks]

2. Distinguish between economic rent and quasi-rent. [2 Marks]

2022

1. What does functional distribution of income mean? [2 Marks]

2. What is the value of the marginal product (VMP)? [2 Marks]

2023

1. Explain the difference between functional distribution and personal distribution of

2. Mention two criticisms of Ricardian theory of rent. [2 Marks]

For 8 Marks

Unit-1
2020

1. How is demand defined in economics? Explain the various factors which determine
demand for a commodity. (4+6=10)

2. What is the coefficient of price elasticity of demand? Discuss the various types of price
elasticity of demand. (2+8=10)

2021

1. What is price elasticity of demand? Explain the different factors determining price
elasticity of demand. [2+6=8 Marks]
2. What do you mean by supply? Explain the factors that affect the supply of a
commodity. [2+6=8 Marks]

2022

1. Mention the factors which determine demand for a commodity. Explain the law of
demand with the help of schedule and diagram. [2+6=8 Marks]

2. Write any two factors determining elasticity of demand. Explain price, income, and
cross-elasticity of demand. [2+6=8 Marks]

Principles of Microeconomics 8
 2023

1. What is market equilibrium? Discuss the concept of market equilibrium with suitable
diagram. [2+6=8 Marks]

2. Mention two determinants of supply. Explain the concept of movement along and shift
in supply with suitable diagram. [2+6=8 Marks]

Unit-2
2020

1. Define indifference curves. What are their standard properties? Discuss. (2+8=10)

2. What is price consumption curve? Derive demand curve from price consumption
curve. (3+7=10)

2021

1. State the assumptions of the indifference curve. Explain how a consumer attains
equilibrium under indifference curve analysis. [2+6=8 Marks]

2. "Price effect is a complement of income effect and substitution effect." Discuss. [8

2022

1. Discuss the properties of the isoutility curve. [8 Marks]

2. Derive the demand curve from the price consumption curve. [8 Marks]

2023

1. Discuss the concept of income effect with suitable diagram. [8 Marks]

2. Explain the concept of market equilibrium with market demand and supply. [8 Marks]

Unit-3
2020

1. Explain the relationship between marginal cost (MC) and average variable cost (AVC)
with the help of diagram. Can there be some fixed cost in the long run? If not, why?
8+2=10

Principles of Microeconomics 9
 2. Discuss the law of variable proportions with reference to the three stages of production.
10

2021

1. What are returns to scale? How is returns to scale explained through isoquants?
[2+6=8 Marks]

2. What are internal and external economies of scale? Discuss the different types of
internal economy. [3+5=8 Marks]

2022

1. Discuss the law of variable proportions with the help of schedule and diagram. [8
Marks]

2. Discuss the properties of isoquant. [8 Marks]

2023

1. Discuss the law of returns to scale with the help of schedule and diagram. [8 Marks]

2. Explain the important factors influencing diseconomies of scale. Give one example of
diseconomies of scale. [8 Marks]

Unit-4
2020

1. (a) What conditions are necessary for a market to be perfectly competitive?

(b) Explain with the help of a diagram, how a firm attains equilibrium under perfect
competition market in the long period. 4+6=10

2. (a) Distinguish between production cost and selling cost.

(b) How is price determined under monopolistic competition in the short period?
3+7=10

2021

1. What is monopoly? How does a monopolist determine price and output both in the
short and long run? [1+7=8 Marks]

2. What is oligopoly? What are its main characteristics? Why does indeterminateness of
the demand curve occur under oligopoly? [2+5+1=8 Marks]

Principles of Microeconomics 10
 2022

1. Explain the equilibrium price-output determination of a firm under perfect

2. Explain the equilibrium price-output determination of a firm under Monopolistic

2023

1. Define monopoly. Discuss the important features of the monopoly market. [2+6=8
Marks]

2. Discuss the long-run supply curve of an industry under increasing cost condition. [8
Marks]

Unit-5
2020

1. Discuss the marginal productivity theory of factor pricing. 10

2. Critically discuss the Ricardian theory of rent. 10

2021

1. Discuss critically the marginal productivity theory of distribution. [8 Marks]

2. Explain critically the Ricardian theory of rent drawing a distinction between scarcity
rent and differential rent. [8 Marks]

2022

1. Discuss the marginal productivity theory of distribution. [8 Marks]

2. "Rent is a differential surplus." Explain the statement with the help of a diagram. [8
Marks]

2023

1. What do you mean by the supply of factor? Explain the important factors influencing
the supply of factor. [2+6=8 Marks]

2. Discuss the modern theory of wages with the help of a suitable diagram. [8 Marks]

Principles of Microeconomics 11
Principles of Microeconomics 12