KSLU Solved Question Papers
Micro Economics
Previous Year Question Paper with Solution
B.Com. LL.B. (Five Years) · Sem 1
2021 Mar Examination
munotes.in
Mumbai
B.Com. LL.B. (Five Years) Sem 1 Micro Economics 2021 Mar Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2021 Mar examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2021 Mar examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2021 Mar examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
(a)Explain the scope of micro economics.[10]
Answer
For full marks, cover: what "scope" means here; the subject matter of microeconomics in five areas, each with the questions it answers; the methods it uses (partial and general equilibrium; static, comparative static and dynamic analysis; positive and normative statements); the applied fields that grow out of it; where its scope ends; and a conclusion.
What scope means
The scope of a subject is the ground it covers: the questions it asks, the methods it uses and the fields where it is applied. Microeconomics studies the economy from the level of the single unit: one consumer, one firm, one industry, one market. Its scope is therefore everything that can be explained by the choices of such units and by the prices that link them.
A. Subject matter
1. Consumer behaviour and demand. How does a household divide its income among goods? Why does it buy more when a price falls? How strongly does it respond? This area covers utility analysis, indifference curves, the law of demand and elasticity.
2. Production and cost. How does a firm combine land, labour and capital? What happens to output when one input is increased, or all inputs together? How do costs change with output? This area covers the production function, the laws of returns and cost curves.
3. Price and output under different markets. How are price and output fixed when there are thousands of sellers, only one seller, many sellers of similar brands, or a few large rivals? This area covers perfect competition, monopoly, monopolistic competition and oligopoly, and price discrimination.
4. Pricing of factors. Why are wages, rents, interest rates and profits what they are? This area covers marginal productivity, the theories of rent, wages, interest and profit, and the effect of trade unions and monopsony.
5. Economic welfare. Is the economy using its resources in the best way? When do markets fail? This area covers efficiency, consumer's surplus, monopoly's losses and the case for taxes or subsidies on pollution.
B. Methods of analysis
1. Partial and general equilibrium. Partial equilibrium studies one market at a time, holding all others constant. Marshall's analysis of a single industry is the classic case. General equilibrium studies how all markets affect one another at once. A rise in the price of steel, for example, changes the costs of cars, buildings and machines. Microeconomics uses both.
2. Static, comparative static and dynamic analysis. Static analysis studies a position of equilibrium. Comparative static analysis compares two equilibria, before and after a change, such as the price of onions before and after a failed harvest. Dynamic analysis traces the path from one equilibrium to another over time, such as the cobweb of farm prices rising and falling in alternate seasons.
3. Positive and normative statements. A positive statement says what is, and can be tested: "a tax of Rs 10 on a good raises its price by about Rs 6". A normative statement says what ought to be: "the tax is unfair to the poor". Microeconomics mainly makes positive statements, but welfare economics also judges outcomes.
C. Applied fields
Microeconomic tools are applied in many specialised fields:
| Field | What it applies microeconomics to |
|---|---|
| Business (managerial) economics | Demand forecasting, pricing, cost control and investment decisions |
| Public finance | Who bears a tax, and the effects of subsidies on particular goods |
| Labour economics | Wages, employment, minimum wages and trade unions |
| International trade | Comparative advantage and the effect of tariffs on particular industries |
| Agricultural economics | Farm prices, support prices and crop choices |
| Industrial organisation | Market power, mergers and competition law |
| Environmental economics | Pollution as a cost not paid by the polluter, and how to price it |
The common thread
One idea runs through the whole of this scope: decisions at the margin. A consumer buys one more unit while its marginal utility is worth at least its price. A firm produces one more unit while its marginal revenue covers its marginal cost. An employer hires one more worker while the worker's marginal revenue product covers the wage. Because every area rests on the same rule and on prices set by demand and supply, microeconomics is often called price theory.
Where the scope ends
Microeconomics takes the total income and the general price level of the economy as given. Questions about aggregates lie outside its scope: why national income grows or shrinks, why there is general unemployment, why all prices rise together in inflation. These belong to macroeconomics. The two meet where microeconomic behaviour, such as how households save, is used to explain the totals.
Conclusion. The scope of microeconomics covers five areas of subject matter. They are consumer behaviour, production and cost, price and output in different markets, factor pricing and economic welfare. It uses partial and general equilibrium, static, comparative static and dynamic analysis, and both positive and normative reasoning. Its tools are applied in business, public finance, labour, trade, agriculture, industry and the environment. Its scope ends where questions about the whole economy begin.
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