ECO402 Midterm Past Paper 2006 Session 3

MIDTERM EXAMINATION

FALL 2006 ECO402 - MICROECONOMICS (Session - 3 ) Marks: 40 Time: 60min

Student Name:

Center Name/Code: Exam Date: Wednesday, November 22, 2006

All questions are compulsory.

This exam consists of 10 Multiple Choice Questions (MCQ’s) carrying 1 mark each,5 fill in the blanks carrying 1 mark each, 5 Short questions carrying 3 marks each and 1 Descriptive questions carrying 10 marks.

You are required to show all the working of short questions as well as Descriptive question.

This examination is closed book, closed notes, closed neighbors.

Use of calculator is allowed in the examination.

You may wish to pace yourself with your own watch, but the Supervisor will be the official timekeeper of the test.

Failure to comply with the Supervisor’s directions will result in your test being cancelled. Please comply with supervisor’s directions to avoid any unpleasant event. Question Question Marks Question Marks

Q1. Alvin's preferences for good X and good Y are shown in the diagram below. (1 marks)

Based on given Figure, it can be inferred that:

Alvin does not consider good X as "good."

Alvin will never purchase any of good Y.

Alvin regards good X and good Y as perfect substitutes.

Alvin regards good X and good Y as perfect complements.

Q2. An increase in income, holding prices constant, can be represented as: (1 marks)

A change in the slope of the budget line.

A parallel outward shift in the budget line.

An outward shift in the budget line with its slope becoming flatter.

A parallel inward shift in the budget line.

Q3. The short run, as economists use the phrase, is characterized by: (1 marks)

A period where the law of diminishing returns does not hold.

At least one fixed factor of production, and firms neither leaving nor entering the industry.

All inputs being variable.

No variable inputs - that is all of the factors of production are fixed.

Q4. Which of the following inputs are variable in the long run? (1 marks)

Labor.

Capital and equipment.

Plant size.

All of the given options.