Class 1ST YEAR Federal Board 2009
Paper:Economics (Objective Type)                                                      Time Allowed: Max.Marks:
Note:Use this paper to write the answers to the objective questions.No marks will be awarded for           cutting,over-writing or using a pencil.This paper must be tagged with the answer-book.
1-       Insert the correct option. 20
(i)       The prices of non-economic goods are.
          (Ans) Zero
(ii)      Law of diminishing marginal utility provides the basis for the law of
          (Ans) Demand
(iii)     Which of the following is a supply equation?
          (Ans) Q -- 2p - 14 = 0
(iv)     The following diagram shows the demand and supply curves for petrol. The present equilibrium is at           point E. What could be the new equilibrium if there were a large fall in the price of cars?
                                                  
(v)      If a firm benefits from economics of scale. Which production cost must fall as a result?
          (Ans) Averages cost
(vi)     Which one of the following is not an assumption of the law of supply?
          (Ans) No change, in method of production.
(vii)     In which of the following circumstances would the excise duty be shifted entirely to consumers?
           (a) Demand is relatively more price elastic than supply?
           (b) Demand is perfectly inelastic.
           (c) Supply is unitary price elastic.
           (d) Supply is perfectaly inelastic.
(viii)    What is the subject matter of economics?
           (Ans) Optimum use of scarce resources for the satisfaction of unlimited human wants?
(ix)      Total utility is maximum when:
           (Ans) Marginal utility is Zero.
(x)       If the price elasticity of demand for a product is constant and equal to unity.Which curve in the             following diagram shows the relationship between total expenditure on the product and its price?
                                           
(xi)       If a firm experiences an increase in its variable cost. How will its average variable cost and its             marginal cost be affected?
                       Average variable cost                              Marginal cost
            A                     Rise                                                    Rise
            B                     Rise                                               No change
            C                 No change                                              Rise
            D                    Fall                                                      Rise
(xii)      Under which law are the slopes of average and marginal product curves always zero?
            (Ans) Law of constant return.
(xiii)     Malaysia enjoy monopoly on rubber.What kind of monopoly is it?
            (Ans) Natural monopoly
(xiv)     What does labour intensive technique of production mean?
            (a) More labour and less capital.          (b) Less labour and more capital
            (c) More labour and no capital.            (d) More labour and no land.
(xv)      What is the factor considered for assigning a weight to an index number?
            (a) Relative importance of commodities.
            (b) Relative importance of price.
            (c) Relative importance of time periods.
            (d) B and C.
(xvi)     Income and demand are negatively co-related in case of:
            (a) Normal goods.         (b) Comforts
            (c) Luxuries.                  (d) Inferior goods.
(xvii)    Marginal utility is the utility obtained by consuming:
            (a) First unit of consumption.        (b) Each additional unit of consumption.
            (c) Last unit of consumption.        (d) B and C.
(xviii)    What would happen to the price of a product when both demand and supply all in equal              proportions?
            (Ans) It would rise
(xix)     Which of the following would be true when a firm attains sub-normal profit under perfect             competition?
            (Ans) AR = AC
(xx)      Quasi rest can obtained if:
            (a) Supply of factors other than land is temporarily fixed.
            (b) There is difference in fertility of land.
            (c) The government legislate on it.
            (d) Non of these.
2.a)     Attempt any FIFTEEN parts. 45
(i)        Why do we study economics? Give three reasons.
(ii)        Define the following functions by giving examples from economics:
            (a) Increasing function. (b) Decreasing function.
(iii)       Differentiate between variable and parameter by giving example from economics.
(iv)       With the reference to Rise and fall, Extension and Contraction in supply, identify the nature of             change in demand from:
            (a) A to B             (b) B to C            (c) C to D               (d) D to A
(v)       If government increases the rate of income tax,what willbe the effects on disposable            income,consumption,savings and investment?
(vi)      Define the following.
           (a) Production of wealth. (b) Distribution of wealth.
(vii)     Write down the equilibrium conditions of a firm under perfect competition. Draw diagrams.
(viii)    Why does the demand curve facing a firm under monopoly slope downward? Draw the diagram.
(ix)      Differentiate between point elasticity and arc elasticity of demand with the help of diagrams.
(x)      Write down three determinants of demand elasticity.
(xi)      Solve the following equations to find equilibrium quantity and equilibrium price:
           Qd = 40 - 3p Qs = .2 + 4p Qd = Qs
(xii)     What are the three stages of the law of variable proportions? Show in a diagram.
(xiii)    What do you mean by three laws of returns? Show in one diagram.
(xiv)    See the diagram and answer the questions.
           (a) What is the market price? Why?
           (b) What is the short period normal price? Why?
           (c) What is the long period normal price? Why?
(xv)     Differentiate between net interrest and gross interest.
(xvi)    What do you mean by zero rate of interest?
(xvii)    Mr. Ali and Mr. Umer work in two different organizations. Both are earning an income of Rs.            10,000/- per month but Mr.Umer is availing other facilities like medical facility and conveyance             facility provided by his organization.Whose real wage is higer and why?
(xviii)    See the diagram and answer the questions for each of the three possibilities:
            n d = 1 , n d > 1 , n d < 1
                

           (a) What is the elasticity of demand at point A?
           (b) What is the elasticity of demand at point B?
           (c) What will be the nature of the elasticity of demand between the points A and B?
(xix)    Write down the three exceptions of law of demand.
(xx)     Derive the supply equation. If values of P and Qs
                     P          Qs
                     1           15
                     2           25
(xi)      The following diagrams show the wege rates of cleaners (OWc) and Nurses (OWn)
                
          What will be the result if a national minimum wage rate of (OM) were introduced?
2.b)    Attempt any One part. (1 x 5 =5)
(i)       What is the practical importance of law of diminishing marginal utility?
(ii)      Write down any five causes of rise and fall in supply.
          Attempt any Three questions. (3 x 10 = 30)
3.       Least cost combination of factors of production is expressed in the following formula:
          MPa = MPb = MPc ------------------ MPn
           pa         Pb       Pc                                 Pn
          Explain the assumptions and limitations of this formula.
4.       What do you understand Ricardian theory of rent?
5.       Explain the short period equilibrium of a firm under perfect competition through marginal cost and           marginal revenue approach.
6.       Give a comparison between monopoly equilibriul and competitive equilibrium of firms.