1. Stateandexplainthelawofdiminishingmarginalutility?Howislawof demand derived from it? (5 marks)

2. What is meant by consumer's equilibrium? How does a consumer reach his equilibrium position in cardinal utility analysis? (5 marks)

3. ExplaintheLawofEqui-marginalutility?Howdoesitexplainconsumer's equilibrium? (5 marks)

4. YouaregiventhefollowingmarginalutilitiesofgoodsXandYobtained by a consumer. Given that price of X = K5, price of Y = K2 and income = K22, find out the optimal combination of goods. (10 marks)

Number of units consumed of MU MU

A commodity (utils)x ( utils)y

1 30 20 2 25 18 3 20 16 4 15 14 5 10 12 6 5 10 718

5. IntheelectronicmarketofNehruPlace,thedemandfunctionas analyzed by Pankaj Electronics for it's LCD TV sets is P = 12000 - 6 Q, Find out

a) The marginal revenue function for the same. (5 marks)

b) at what price and quantity will marginal revenue be zero. (5 marks)

6. Fillintheblanks:

Output

100

200

300

400

500

600

700

800

(25 marks)

TC

TFC

TVC

60

360

AFC

AVC ATC MC

260

0.50

1.60

0.30 1.05

3.00