Birla Institute of Technology & Science, Pilani Work-Integrated Learning Programmes Division First Semester 2022-2023

Mid-Semester Test (EC-2 Regular)

Q.1 (a) Calculate Total Fixed Cost, Average Fixed Cost, Average Variable Cost, and Marginal Cost for Firm A at different output levels from the following data. [5]

The demand equation of Firm A is P = 180-22.5Q. If the cost structure is as given above, calculate the following. (a) The Equation of the Marginal Revenue Line. [1] (b) The output for profit maximization [2] (c) The profit/loss corresponding to profit maximization output [2] (d) Graphically represent the above. (Please do it on your answer sheet, You don't need

graph paper.) [3]

An item's demand and supply equations are P=200-0.5Q and P = 50+Q, respectively. Find the equilibrium price and quantity. [2] Represent the above in a graph and mark consumer and producer surplus areas. [3] Calculate consumer and producer surplus. [2] Write a note on the causes of shifts in demand and supply equations and the consequent impact on equilibrium price and quantity. [3]

Discuss and explain the properties of indifferent curves. [3]

A consumer has a budget of Rs. 200 to be spent on two items, X and Y. Prices of X and Y are Rs. 40 and Rs. 20, respectively.

utility analysis.

[2]

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(i) What is the equation of the budget line? Graphically present it showing the opportunity set of consumption. [2]

(ii) The marginal utility of X is 50, while that of Y is 30. Will the consumer be in equilibrium? What will a rational customer do in this situation? Explain in the light of