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B.Com. LL.B. (Five Years) Sem 1 Micro Economics 2023 Mar Question Paper with Solutions

KSLU Solved Question Papers

Micro Economics

Previous Year Question Paper with Solution

B.Com. LL.B. (Five Years) · Sem 1

2023 Mar Examination

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Mumbai

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First published on munotes.in on 21 October 2026.

Published by munotes.in, Mumbai.

Model answers written and edited by the munotes.in editorial desk.

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munotes.in is an independent study resource for students of Karnataka State Law University. It is not affiliated with Karnataka State Law University, and is not endorsed by it.

The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.

The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Mar examination.

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Contents

The questions below are the paper as Karnataka State Law University set it at the 2023 Mar examination, in the order it was set.

MarksPage

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The Paper as Set

The questions in this volume are the questions asked at the 2023 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  ·  5 questions answered

Instructions printed on the paper

  • N.B. (1) Answer all five units. (2) One essay type and short note is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answers should be written either in English or Kannada completely. (5) Use simple calculator only.

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.

Read the original question paper

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Q1

Unit I

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(a)Explain the law of diminishing marginal utility.[10]

Answer

For full marks, cover: the meaning of utility, total utility and marginal utility; the statement of the law (Gossen, 1854; Marshall's words); the assumptions; a worked schedule and the diagram; why marginal utility diminishes; the relation between total and marginal utility; the main exceptions; the importance of the law; and a conclusion.

Utility, total utility and marginal utility

Utility is the power of a good to satisfy a want. It is subjective: it differs from person to person and from time to time. It is not the same as usefulness or morality.

  1. Total utility (TU) is the total satisfaction from all the units of a good consumed.
  2. Marginal utility (MU) is the additional satisfaction from one more unit.
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Statement of the law

The law was first stated by the German writer H.H. Gossen in 1854, and is called Gossen's first law. Alfred Marshall gave it its classic form in Principles of Economics (eighth edition, 1920): "the additional benefit which a person derives from a given increase of his stock of a thing, diminishes with every increase in the stock that he already has."

Put simply: as a person consumes more units of a good one after another, the satisfaction from each additional unit goes on falling.

Assumptions

  1. Utility can be measured in units (utils).
  2. The units of the good are of the same size and quality.
  3. Consumption is continuous, without a long break.
  4. The consumer's tastes, income and habits do not change.
  5. The consumer is normal and rational.

Worked schedule

Kavya eats rasgullas one after another at a wedding.

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RasgullaMarginal utility (utils)Total utility (utils)
1st1212
2nd921
3rd627
4th330
5th030
6th-327

The first rasgulla gives the most satisfaction. Each later one gives less. The fifth gives none; this is the point of satiety. The sixth makes her feel unwell, so its marginal utility is negative and total utility falls.

Diagram. Draw two panels with rasgullas on the horizontal axis. In the upper panel, the TU curve rises at a slowing rate, peaks at the fifth unit and then falls. In the lower panel, the MU curve slopes downward, touches zero at the fifth unit and goes below the axis after it.

Why marginal utility diminishes

  1. Particular wants are satiable. Wants in general are unlimited, but a single want can be satisfied for the time being.
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  1. Goods are imperfect substitutes. One good cannot satisfy all wants, so more of it meets a weaker and weaker want.
  2. Uses of decreasing importance. Early units go to the most important uses, later units to less important ones.

Relation between total and marginal utility

  1. When MU is positive, TU rises.
  2. When MU is zero, TU is at its maximum.
  3. When MU is negative, TU falls.

From marginal utility to demand: a worked step

Suppose each util is worth one rupee to Kavya, and rasgullas are sold at a sweet shop for Rs 6 each. She buys the first (worth Rs 12), the second (worth Rs 9) and the third (worth Rs 6). The fourth is worth only Rs 3, less than the price, so she stops at three. If the price falls to Rs 3, she buys a fourth. So a lower price leads her to buy more. The law of diminishing marginal utility thus produces the downward sloping demand curve. A consumer goes on buying until the marginal utility of the good, measured in money, equals its price.

Exceptions

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  1. Rare collections, such as stamps or coins, where each new piece may add to the value of the whole.
  2. Hobbies and music, where enjoyment may grow for a while.
  3. Money, which many people never seem to have enough of, though even its marginal utility falls as wealth rises.
  4. Addictive goods, where the consumer is not normal.

Most exceptions arise because an assumption, such as identical units or a normal consumer, is not met.

Importance

  1. It is the basis of the law of demand. A consumer buys more only at a lower price, because each extra unit gives less satisfaction.
  2. It explains consumer's surplus, since earlier units are worth more than the price paid.
  3. It explains variety in consumption. People spread spending over many goods.
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  1. It supports progressive taxation. A rupee taken from a rich person causes less sacrifice than a rupee taken from a poor person.
  2. It explains the value paradox. Water is cheap and diamonds dear because water is plentiful and its marginal utility low.

Conclusion. The law of diminishing marginal utility states that as more units of a good are consumed, the additional satisfaction from each unit falls. In Kavya's case marginal utility falls from 12 utils to zero at the fifth rasgulla, where total utility peaks at 30. Its basis is that a particular want can be fully met. It is the foundation of the law of demand, consumer's surplus and the case for progressive taxation.

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The rest of the answers

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