Tribhuwan University

Institute of Science and Technology

2079

Bachelor Level / First Year / Second Semester / Science

Bachelors in Information Technology (ECO155)

(Economics)

Full Marks: 60

Pass Marks: 24

Time: 3 Hours

Candidates are required to give their answers in their own words as for as practicable.

The figures in the margin indicate full marks.

Section A

Long Answers Questions

Attempt any TWO questions.
[2*10=20]
1.
Define price elasticity of demand. Discuss the various types of price elasticity of demand with diagrams.[10]
2.
What is indifference curve? What are its properties? Explain.[10]
3.
What is a perfect competition market? How the price and output are determined under it in the short run?[10]
Section B

Short Answers Questions

Attempt any Eight questions.
[8*5=40]
4.
Write short notes on scarcity and choice. [5]
5.
Consider the following table: Find the price elasticity of demand for movement from points A to C and C to A by proportional method. Compute the price elasticity of demand at the mid way between A to C and C to A by arc method.

$\begin{array}{|c|c|c|c|c|c|c|c|}\hline \text{Combination} & A & B & C & D & E & F & G \\ \hline \text{Price (Rs.)} & 7 & 6 & 5 & 4 & 3 & 2 & 1 \\ \hline \text{Quantity (Units)} & 500 & 750 & 1250 & 2000 & 3250 & 4750 & 8000 \\ \hline \end{array}$
[5]
6.
Consider the following cost schedule: a. Compute TFC, AFC, AVC, MC and AC. b. Graph AC and MC and explain the relationship between AC and MC.

$\begin{array}{|c|c|c|c|c|c|c|c|c|c|c|}\hline \text{Output} & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 \\ \hline \text{Total Cost (TC)} & 300 & 330 & 354 & 372 & 396 & 450 & 540 & 672 & 840 & 1080 \\ \hline \end{array}$
[5]
7.
Let us suppose a consumer has fixed income of Rs.2000. He selects two goods X and Y for consumption having prices with Rs.400 and Rs.200 respectively. a. Derive budget line. b. Show his equilibrium point when he allocates entire budget equally on two goods. [5]
8.
Discuss the government intervention in market through price floor, price ceiling and tax effect. [5]
9.
What are the instruments of monetary policy? [5]
10.
Explain the condition for optimum employment of two variable inputs. [5]
11.
Explain the features of free market economy. [5]
12.
Calculate Gross Domestic Product (GDP) and National income from the following data:

$\begin{array}{|c|l|c|}\hline \text{S.N.} & \text{Items} & \text{Rs. (in Millions)} \\ \hline 1 & \text{Personal Consumption Expenditure} & 6500 \\ 2 & \text{Indirect tax less subsidies} & 150 \\ 3 & \text{Government consumption and investment expenditure} & 2500 \\ 4 & \text{Change in business inventories} & 100 \\ 5 & \text{Gross Private domestic fixed investment} & 950 \\ 6 & \text{Exports} & 900 \\ 7 & \text{Net factor payments to the rest of the world} & -100 \\ 8 & \text{Imports} & 1200 \\ 9 & \text{Depreciation} & 200 \\ 10 & \text{Foreign investment} & 250 \\ \hline \end{array}$
[5]