All India Management Association (AIMA) 2007 M.B.A Marketing Management Business Economics – I - Question Paper

17. C (a) actual. Indifference curve is different combinations of 2 goods which provide the
identical level of total utility
(b) actual. Total utility is the sum of marginal utilities of all the goods consumed.
(c) False. When price of a product increases demand for the product reduces.
As complimentary goods are consumed together, demand for the compliment
also reduces.
(d) actual. Utility is subjective and varies from individual to individual and from
time to time for the identical individual, hence cannot be measured precisely.
(e) actual. Consumer surplus is the difference ranging from what the consumer is
willing to pay and what he truly pays. Economic value is the market value
of a good.
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18. A The indifference curve is convex to the origin. It follows from the assumption that
the marginal rate of substitution of X for Y (MRSxy) diminishes as more and more
of X is substituted for Y. Only a convex indifference curve can mean a diminishing
marginal rate of substitution of X for Y.
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19. C
At equilibrium =
=
? MUy= ? 10 = 140 utils.
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20. C The consumer would consume the good up to a point where MU = P.
TU = 12X1.5
MU = 18X0.5 = 108
X0.5 = 6
Or, X = 36 units.
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21. E MUA/PA = MUB/PB
That provide 250/50 = 350/ PB
or PB = = Rs.70.
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22. B Total utility = U = 40XY
MUX = U/ X = 40Y
MUY = U/ Y = 40X
At equilibrium, MUX/PX = MUY/PY
40Y/2 = 40X/4
Or, 20Y = 10X
Or, 2Y = X
Thus, if X = 40, Y = X/2 = 40/2 = 20 units.
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23. B choice (b) is false because the avg. product will be greater than marginal
product only after the point when both of them are equal. Before this point the
marginal product will greater than avg. product.
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24. D An isocost line is a straight line sloping downward from left to right. < TOP
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25. C Total product reaches maximum position when marginal product is zero. When AP
= MP, AP will be at maximum. When AC = MC, AC will be at minimum. Hence
the accurate ans is (c).
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26. A The marginal product of a factor increases 1st and after reaching a certain level it
begins falling. So due to this the marginal product curve presume an inverted u shape.
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17
ans cause
27. A Expansion path is the locus of various points where the firm’s expenditure

Earning:   Approval pending.