Micro-bba-fall20-Subjective PDF

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Invigilator’s Signature

Candidate’s Examination Roll No/Registration No.

THE UNIVERSITY OF LAHORE Faculty of Management Sciences Lahore Business School Fall 2020 – Mid Term Subjective Instructor’s Name:

Hira Waleed

Paper:

Microeconomics

Program / Date:

19-01-21

Subject Code:

ECO1010

Time Allowed:

90 minutes ---------------------Cluster Head

Total Marks:

30 --------------------Program Head

Reviewed By:

Approved By:

Instructions for Candidates i. ii.

Attempt all questions. Any question not attempted will be marked as incorrect. All questions carry equal marks. Subjective paper must be returned to examiner at the completion of this section.

iii. iv.

Question 1:

Answer the following short questions. Each question carries equal marks.

i.

Distinguish between accounting profit, economic profit.

ii.

Distinguish between explicit and implicit costs.

iii.

Infer between fixed and variable costs.

iv.

State the three basic characteristics of pure competition.

v.

Define the monopoly. (10 Marks)

Question 2:

What is marginal product, and what does it mean if it is diminishing? (05 Marks)

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Question 3:

Jane’s Juice Bar has the following cost schedules:

Quantity Variable Cost Total Cost 0 vats of juice $0 $ 30 1 10 40 2 25 55 3 45 75 4 70 100 5 100 130 6 135 165 a. Calculate average variable cost, average total cost, and marginal cost for each quantity. b. Graph all three curves. (08 Marks) Question 4:

Suppose that business travelers and vacationers have the following demand for

airline tickets from New York to Boston: Quantity Demanded

Quantity Demanded

Price

(business travelers)

(vacationers)

$150

2,100 tickets

1,000 tickets

200

2,000

800

250

1,900

600

300

1,800

400

a. As the price of tickets rises from $200 to $250, what is the price elasticity of demand for (i) Business travellers and (ii) vacationers? (Use the midpoint method in your calculations.) b. Why might vacationers have a different elasticity from business travellers?

(07 Marks)

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Continued From Overleaf

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