BHANSALI

CLASSES
FACULTY: MOHIT BHANSALI
B.COM.(H) DELHI UNIVERSITY, CA FINALIST
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Economics Test – 1
Instructions:
1. Total Time is 90 minutes.
2. Section A is compulsory. Attempt any 7 questions out of 8 from Section B and 2 questions
out of 3 from Section C.
3. Give diagrams wherever necessary.
4. Use of calculator and any electronic device is prohibited.

Section A

1. Demand of a product is elastic. Its price falls. What will be its effect on total expenditure on the
product? Give a numerical example. (3)
2. Does a rise in price of other goods have same effect on demand for a commodity? (3)
3. Calculate the missing figures: (4)

Units 1 2 3 4 5
TU (in utils) 16 - - - 40
MU (in utils) - 12 8 6 -

Section B

4. Define marginal utility. State the law of diminishing marginal utility. (4)
5. What is budget line? Why is it downward sloping? (4)
6. Amit wants to purchase two goods which are available in integer units only. If his income is Rs. 40
and both the goods are priced at Rs. 10 each, then write the bundles which cost exactly Rs. 40.
(4)
7. Distinguish between ‘increase in demand’ and ‘increase in quantity demanded’ of a commodity.
(4)
8. The demand function of a commodity X is given by Q x= 20-3Px. find out the values of Px, when
corresponding values of Qx are given as: 5, 8, 11 and 14. (4)
9. Calculate the elasticity of demand for a commodity when its price increases by 25% and quantity
demanded falls from 150 units to 120 units. (4)
10. Explain, with the help of a diagram, the geometric method of measuring price elasticity of demand.
(4)
11. A consumer buys 50 units of a good at a price of Rs. 10 per unit. When price falls to Rs. 5 per unit he
buys 100 units. Find out price elasticity of demand by the ‘total expenditure method’.
(4)
Section C

12. Explain the 3 properties of indifference curves. (6)

13. Explain the relationship between:
i. Prices of other goods and demand for the given good (3)
ii. Income of the buyers and demand for a good (3)
14. Discuss various factors that affect price elasticity of demand. (6)

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