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Micro Economics

Semester 1 · 16 topics in 5 units

Past question papers for Micro Economics

Unit I 1 topic

  1. Micro and macro economics, uses and limitations, statics and dynamicsThe micro and macro approaches to economics, the scope, uses and limitations of micro economics, the problem of choice, and the meaning and limits of economic statics, comparative statics and dynamics.7 min

Unit II 5 topics

  1. Law of demand: exceptions, changes in demand and determinantsStatement and assumptions of the law of demand, why the demand curve slopes downward, its exceptions, extension and contraction versus increase and decrease in demand, and the factors that determine demand.5 min
  2. Elasticity of demand: meaning, types and measurementPrice, income and cross elasticity of demand, the five degrees of price elasticity, the percentage, total outlay, point and arc methods of measurement with worked figures, the determinants of elasticity and its uses.6 min
  3. Law of supply, supply function and elasticity of supplyMeaning of supply and stock, the law of supply with its assumptions and exceptions, the supply function and its determinants, extension versus increase in supply, and the degrees, measurement and determinants of elasticity of supply.5 min
  4. Cardinal utility: law of diminishing marginal utility and law of equi-marginal utilityThe cardinal (Marshallian) approach to consumer behaviour: total and marginal utility, the law of diminishing marginal utility, and the law of equi-marginal utility as the condition of consumer's equilibrium, with a worked budget.6 min
  5. Consumer's equilibrium under indifference curve analysis; price, income and substitution effectsThe ordinal approach of Hicks and Allen: indifference schedule and map, marginal rate of substitution, properties of indifference curves, the budget line, the conditions of consumer's equilibrium, and the income, substitution and price effects.7 min

Unit III 3 topics

  1. Production: types of utility, production function and law of variable proportionsProduction as the creation of form, place, time and other utilities, the production function and its short-run and long-run forms, total, average and marginal product, and the law of variable proportions with its three stages.6 min
  2. Cost curves in the short and long run, opportunity cost, and revenue curvesConcepts of cost including opportunity cost, the short-run cost schedule and the shapes of TFC, TVC, AFC, AVC, ATC and MC, the long-run average cost curve as an envelope, and the total, average and marginal revenue curves under competition and monopoly.6 min
  3. Isoquants, producer's equilibrium and the laws of returns to scaleIsoquants and their properties, the marginal rate of technical substitution, the isocost line, the least-cost combination of factors, the expansion path, and increasing, constant and diminishing returns to scale with their causes.6 min

Unit IV 3 topics

  1. Perfect competition: price and output in the short run and long run, equilibrium of firm and industryFeatures of perfect competition, price determination by the industry, the time element, the conditions of the firm's equilibrium, short-run profit, normal profit, loss and the shut-down point, long-run equilibrium, and the equilibrium of the industry, with a worked schedule.6 min
  2. Monopoly: features, price and output determination, and discriminating monopolyMeaning, features and sources of monopoly, the monopolist's AR and MR, short-run and long-run equilibrium with a worked schedule, and price discrimination: degrees, conditions, the equilibrium of the discriminating monopolist and dumping.6 min
  3. Monopolistic competition: price and output determination; features of oligopolyChamberlin's monopolistic competition: features, product differentiation and selling costs, short-run and long-run equilibrium of the firm and the group, excess capacity, and the features of oligopoly with the kinked demand curve.6 min

Unit V 4 topics

  1. Rent: the modern (demand and supply) theory and quasi-rentEconomic and contract rent, a short contrast with Ricardo, the modern theory of rent as a surplus over transfer earnings determined by demand and supply, the three elasticity cases, and Marshall's quasi-rent with worked figures.6 min
  2. Wages: marginal productivity theory, subsistence theory, collective bargaining and wage differentialsThe marginal productivity theory of distribution with a worked schedule and its criticism, the subsistence theory and the iron law of wages, collective bargaining and wages, and the causes of wage differentials.6 min
  3. Interest: the loanable funds theory and Keynes' liquidity preference theoryGross and net interest, the classical background, the neo-classical loanable funds theory with its sources of demand and supply, and Keynes' liquidity preference theory with the three motives, the liquidity trap, and a comparison of the two.6 min
  4. Profit: risk, uncertainty and innovation theoriesGross and net profit, normal and supernormal profit, Hawley's risk theory, Knight's uncertainty-bearing theory with insurable and non-insurable risks, and Schumpeter's innovation theory, each with its criticism.5 min