Postgraduate Diploma in Marketing
June 2015 Examination
Economic and Legal Impact (Econ)
Date: 16 June 2015
Time: 0900 Hrs – 1200 Hrs
Duration: Three (03) Hrs
Total marks for this paper is 100 marks.
There are three parts in this question paper. All questions in Part One and Part Two are
COMPULSORY.
Part One includes 20 Compulsory multiple choice questions.
Select the most appropriate answer from the given choices and mark it in the given space
in the answer book.
Part Two includes 06 Compulsory short answer questions.
Part Three includes 02 Essay Type Questions. Answer only 01 Question from this part.
Instructions to candidates
1
2.
3.
4.
5.
State your Registration Number on the front cover of the answer book and on
each and every additional paper attached to it. Your name must not appear
anywhere in the answer book or answer scripts
Always start answering a question on a new page
You are reminded that answers should not be written in pencil or red pen except
in drawing diagrams
Answer the questions using:
 Effective arrangement and presentation
 Clarity of expression
 Logical and precise arguments
 Clear diagrams and examples where appropriate
Illegible hand writing and language errors will be penalised
PART ONE
Read the question and select the most appropriate answer out of the four
given choices.
Tick your choice in the given space in the answer booklet.
Question 01
Question 1.1
Economic studies:
a.
b.
c.
d.
Allocation of scarce resources
How to satisfy human needs and wants
Economic behavior of man
All of the above
Question 1.2
Factors of production can be best defined as:
a.
b.
c.
d.
Land, labour, material
Capital, machinery, raw material
Land, labour, capital and entrepreneurship
All of the above
Question 1.3
Production possibility curve explains:
a.
b.
c.
d.
What should be produced by a country
Value of goods produced during a year
Different combinations of goods that can be produced with a given quantity of resources
All of the above
Question 1.4
A demand curve declines to the right of the graph due to:
a.
b.
c.
d.
Law of demand
Declining marginal utility
Budgetary restrictions
Increase of consumer surplus
Page 2 of 8
Question 1.5
An indefinitely elastic demand curve is:
a.
b.
c.
d.
A horizontal line
Downward sloping line
A curve with a flat bottom
A vertical line
Question 1.6
Consumer surplus can best be defined as:
a.
b.
c.
d.
Utility obtained by consuming a good
Preference to purchase more numbers of the same items
The difference between the price actually paid and the price willing to be paid
None of the above
Question 1.7
Supply of agricultural produce in the short run is:
a.
b.
c.
d.
Highly elastic
Unitary elastic
Highly inelastic
Neither elastic nor inelastic
Question 1.8
Marginal Revenue (MR) is calculated by:
a.
b.
c.
d.
Total revenue divided by total quantity
Average revenue divided by quantity produced
Incremental revenue divided by the total quantity
Incremental revenue divided by the incremental quantity
Question 1.9
In economics, the short run is defined as:
a.
b.
c.
d.
A period less than three calendar years
A period less than one year
A period in which some factors cannot be changed
A period in which all the factors are changeable
Page 3 of 8
Question 1.10
Income elasticity of demand explains:
a.
b.
c.
d.
Relationship between income and quantity demanded
Responsiveness of quantity demanded of a product to its price variations
Responsiveness of quantity demanded to the changes in profits
All of the above
Question 1.11
A Monopoly always faces a demand curve that:
a.
b.
c.
d.
Is vertical
Is horizontal
Declines to the right
Is parabolic
Question 1.12
Price discrimination refers to:
a.
b.
c.
d.
The selling of goods at very high prices
Selling the selected items at lower price
Selling the same commodity to different customers
Selling the same commodity at different prices to different consumers
Question 1.13
Producer surplus can be defined as:
a.
b.
c.
d.
The total revenue obtained by the producer
Satisfaction obtained when selling a good
Amount of profits obtained by the seller
Difference between the price actually received and the price that is willing to be accept
Question 1.14
The kinky demand curve concept explains:
a.
b.
c.
d.
The behavior of a monopoly
The behavior of a firm in perfect competition
Oligopoly market situation
Behaviour of a duopoly
Page 4 of 8
Question 1.15
Equilibrium price of a monopoly is determined when:
a.
b.
c.
d.
MC=MR
MC=AR
AC=AR
None of the above
Question 1.16
When a firm increases its production in the short run, the average fixed cost/AFC:
a.
b.
c.
d.
Increases
Becomes zero
Decreases but never becomes zero
All of the above
Question 1.17
Cost push inflation is caused by:
a.
b.
c.
d.
Over supply of money
Increased cost of production
Rigidities in production in the face of increasing demand
All of the above
Question 1.18
Money market is defined as:
a.
b.
c.
d.
Treasury bill market
Rupee loan market
Corporate bond market
Market for short term investment funds
Question 1.19
Discounting of a treasury bill is best described as:
a.
b.
c.
d.
Selling at a lower price
Selling at a higher price
Selling before the maturity is reached
None of the above
Page 5 of 8
Question 1.20
Capital market is defined as:
a.
b.
c.
d.
Treasury bill market
Rupee loan market
Corporate bond market
Market for long term investment funds
(Total 20 Marks)
PART TWO
This part includes SIX compulsory short answer questions Answer all
questions
Question 02
a. Identify factors of production and prices paid for the utilization of them.
(03 Marks)
b. What is opportunity cost? Explain its significance in business decision making.
(07 Marks)
(10 Marks)
Question 03
a. What is cross price elasticity of demand? Write the formula for the calculation of cross
price elasticity of demand.
(04 Marks)
b. What is consumer surplus? Support your answer with an appropriate graph.
(06 Marks)
(10 Marks)
Question 04
a. Define increasing returns to scale with the support of an appropriate graph. (04 Marks)
b. What are the reasons for the existence of monopolies?
(06 Marks)
(10 Marks)
Page 6 of 8
Question 05
a. What is the formula for the calculation of average (Arc) elasticity?
(03 Marks)
b. What are the causes for a shift in the demand curve and a movement along the demand
curve?
(07 Marks)
(10 Marks)
Question 06
a. What is Kink in Demand Curve?
(02 Marks)
b. Briefly discuss the main characteristics of an oligopoly with the support of examples.
(08 Marks)
(10 Marks)
Question 07
a. Identify the difference between various types of taxes (limit your answer to four
different types).
(04 Marks)
b. Explain briefly how monitory policy could be used to control inflation.
(06 Marks)
(10 Marks)
(Total 60 Marks)
Page 7 of 8
PART THREE
This part includes TWO Essay Type Questions Answer only ONE question
from this part
Question 08
a. What are the different types of unemployment and their causes?
(10 Marks)
b. Explain the effects of unemployment on the economic development of a country.
(10 Marks)
(Total 20 Marks)
Question 09
a. What is a factor market? Discuss how factor markets differ from commodity markets.
(10 Marks)
b. What are the major characteristics/assumptions of a perfect competition? Discuss the
validity of those assumptions.
(10 Marks)
(Total 20 Marks)
(Total 100 Marks)
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