Adani Institute of Infrastructure Management

PGDM (IM) 2019-20

Term 1

Micro Economics, Quiz 1

Date: 19/08/2019

Duration: 15 minutes Maximum Marks: 10

Name: Roll No.:

I. Choose the correct or the most appropriate answer out of the given options
(1.)
(a) Microeconomics is normative in nature. It suggests what the consumers should
consume and producers should produce in any economy.
(b) Micro economics consists of the models which cannot be tested with the statistical
data and hence are not greatly useful.
(c) Microeconomics consists of models which try to explain why the consumers and
producers behave the way they behave. Largely consists of positive economic
principles.
(2.) When we study the price changes of a commodity during different years:
(a) We should ideally use nominal prices.
(b) We should ideally use the real prices which are defined as nominal prices adjusted by
inflation rate.
(c) We should use the nominal prices divided by the real prices to arrive at meaningful
figures.
(3.) Price of Samsung mobile falls significantly in the market. If other factors remain the
same then
(a) Demand curve for I-phone to shifts toward the left hand side and downward shift is
expected in its curve.
(b) Demand curve for Samsung mobile phone shifts upwards on right hand side.
(c) Supply curve for the Samsung mobile curve shifts rightward side.

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 (4.) If the demand for a product is known to be perfectly elastic we expect the demand curve
to be
(a) Downward sloping curve called rectangular hyperbola
(b) Horizontal straight line
(c) Vertical straight line
(5.)
(a) Slope of the budget line of a consumer is always equal to the slope of indifference
curve at each point.
(b) When price of a good X increases and that of Y does not change the budget line
makes parallel shift toward the left hand side.
(c) Indifference curves for complementary goods X and Y are L shaped.

II. Assume that in a market the demand and supply functions of tomatoes are as follows-

QD = 50 – 3P
QS = 16 + 6P
To solve the following questions based on above demand supply function-
(a) Calculate the equilibrium price and quantity of tomatoes.
(b) Suppose the demand for tomatoes is likely to fall by 10 percent in next week, how
would the functions look if other factors remain the same?
(c) Calculate the new equilibrium price and quantity after the fall in demand.
(d) If price of tomatoes increase by 1 percent and causes 3 percent fall in quantity
demanded for it. What is the elasticity of demand for tomatoes?
(e) If income of the consumer increases by 1 percent and causes five percent fall in
quantity demanded for tomatoes. Can we say tomatoes are inferior goods?

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