Welcome to Prime Academy Delhi

The Intermediate Micro Economics – I (ECON – 007) Course for BA (Hons) Economics Semester III, UGCF 2023, Delhi University has been taught by Mr. Dheeraj Suri. The Video Lectures are based upon the books prescribed by the University of Delhi. The Duration of Video Lectures is approximately 50 Hours.

Course Fee : Rs. 7,000

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• Full Course Video Lectures
• Complete Study Material (PDF Notes) which includes Concepts, Previous Year Questions, Numerical Questions, MCQ’s and Important Questions
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• Live online Doubts Sessions (at least twice a week) for resolution of Doubts
• Mock Tests at the Website
• Video Lectures Cover Theory Portions Exchaustively + Complete Solutions of Back Questions of readings + Solutions of Previous Years Papers + Large Number of Numericals

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Consumer Equilibrium Test #1

1. Please Read the Questions and all the options Carefully, Before Selecting Your Choice.
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1 / 11

In a two good world there is an individual with income m = 3 and utility function is given by u = = x^0.5y^0.5 . The price of good x is Re. 1 per unit and the price of good y is also Re. 1 per unit.

If the individual can consume any non negative amount of good x and y, then the optimum consumption bundle is

x = 1, y = 1

x = 1.5, y = 1.5

x = 2.5, y = 0.5

x = 0, y = 3

2 / 11

In a two good world there is an individual with income m = 3 and utility function is given by u = x^0.5y^0.5. The price of good x is Re. 1 per unit and the price of good y is also Re. 1 per unit.

If the individual can consume either zero unit of good x or at most one unit of x and any non-negative amount of good y, then the optimum consumption bundle is

x = 1, y = 2

x = 1, y = 3

x = 0, y = 3

x = 3, y = 3

3 / 11

In a two good world there is an individual with income m = 3 and utility function is given by u = x^0.5y^0.5. The price of good x is Re. 1 per unit and the price of good y is also Re. 1 per unit.

If both goods x and y can be consumed in integer amounts (i.e., zero unit, one unit, two units etc.) then the optimum consumption bundle is

x = 3, y = 1

x = 1, y = 3

x = 3, y = 0

x = 1, y = 2 or x = 2, y = 1

4 / 11

Suppose a consumers preferences over commodities 1 and 2 can be represented by the utility function U(x₁, x₂ ) = min⁡{ x₁, x₂ } + max{ x₁, x₂ }, where  x₁, x₂  ≥0. The prices of the two commodities are 1 and 2 respectively and the consumers income is 150. Which of the following is true?

At the optimum, the consumer should consume 150 units of commodity 1 and none of commodity 2.

At the optimum, the consumer should consume 75 units of commodity 2 and none of commodity 1.

At the optimum, the consumer should consume 50 units of commodity 1 and 50 units of commodity 2.

At the optimum, the consumer should spend equal amount on the two commodities.

5 / 11

There are three commodities - the first commodity has a negative price -1 per unit, the second commodity is priced at +1 per unit and third is priced at +2 per unit. Income of the person is 100 per day. Then which one of the following is not true?

An individual may afford to consume the positive amounts of each per day

An individual may afford to consume any amounts of goods 2 and 3 per day

An individual may afford to consume (0, 0, 60)

An individual may afford to consume (20, 0, 60)

6 / 11

Satish is very conscious about the food he eats. He only eats rotis and dal; a cup of dal costs Rs. 2 while each roti costs Re. 1 and Satish decides to spend Rs. 13 per day on food. Also he decides to consume exactly 5500 calories a day; he has been told that each roti has 1000 calories while each cup of dal has 500 calories. He spends his entire money allotted on foods. Then

He consumes 3 rotis and 5 cups of dal.

He consumes no more than 3 rotis per day.

He consumes no more than 5 cups of dal per day.

Unless we are given some more information about preference, we cannot say what Satish does.

7 / 11

Let the following utility function represent the preference relation of an individual

U(x, y) = x^0.5 + y
Let Px, Py and M denote the prices of good x, y and money income respectively. Px, Py, M > 0

Optimal consumption bundle of the consumer includes

Only good x

Only good y

both goods x and y

cannot say

8 / 11

Let the following utility function represent the preference relation of an individual

U(x, y) = x^0.5 + y
Let Px, Py and M denote the prices of good x, y and money income respectively. Px, Py, M > 0

Given prices, as M increases optimal consumption of x

increases

decreases

remains constant

cannot say

9 / 11

Let the following utility function represent the preference relation of an individual

U(x, y) = x^0.5 + y
Let Px, Py and M denote the prices of good x, y and money income respectively. Px, Py, M > 0

Let Py = 2, Px = 1/4m, optimal consumption bundle includes

Only good x

Only good y

both goods x and y

cannot say

10 / 11

Let the following utility function represent the preference relation of an individual

U(x, y) = x^0.5 + y
Let Px, Py and M denote the prices of good x, y and money income respectively. Px, Py, M > 0

If Px = Py in the optimal consumption bundle

equal amount of x and y is consumed

consumption of x is more than y

consumption of y is more than x

cannot say

11 / 11

Consider the function U defined on R² , where U(x, y) = √(3x + y). which of the following statements is true?

U is strictly concave.

U is strictly quasi concave.

U is both strictly concave and strictly quasi concave.

U is both concave and quasi concave

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Exam Pattern

Course Content of Our Video Lectures

Lectures are as per Latest Syllabus for UGCF 2023

Unit I : Consumer Behaviour  [ Marks]

Unit II : Decision Making Under Uncertainty  [ Marks]

Chapter 10 : Risk & Uncertainty [536 Minutes]

Based Upon Bernheim & Whinston Chapter 11

Number of Lectures   11 Lectures

Total Duration of Lectures  536 Minutes

Number of Questions in Notes   36 Questions

Number of MCQ Tests on this Chapter   2 Tests

Unit III : Production behaviour & Markets  [Marks]

Solutions of Previous Year Papers

Syllabus Prescribed by DU

DISCIPLINE SPECIFIC CORE COURSE -7 (DSC-7) : Intermediate Micro Economics – I (Behavourial Foundations of Market Interactions)

Course Description

Learning Objectives

The Learning Objectives of this course are as follows:

• The course is designed to formally analyze the behaviour of individual agents like consumers and
  producers under certain conditions.
• Mathematical tools are used to facilitate understanding of the basic concepts.
• This course looks at the behaviour of the consumer and the choices of a competitive firm.

Learning outcomes

The Learning outcomes of this course are as follows:

• Students will learn the basic elements of consumption and production theories using various
  technical frameworks.
• This course provides them the behavioural foundations of market supply and demand.

Syllabus

UNIT I: Consumer behaviour (15 hours)
Preference and utility, Budget and choice, Income and substitution effect, Demand derivation, Labour
supply, One-person welfare
UNIT II: Decision-making under uncertainty (15 hours)
Expected utility, Risk aversion, Insurance, Risk spreading
UNIT III: Producer behaviour and markets (15 hours)
Technology, Profit maximization, Cost minimization, Supply, Short and long run

Recommended readings

• Serrano, Roberto and Feldman, Alan (2012), A short course in intermediate Microeconomics with
  Calculus, Cambridge University Press
• Espinola-Arredondo, Ana and Mun˜oz-Garcia, Felix (2020), Intermediate Microeconomic Theory, MIT
  Press
• Osborne, M J and Rubinstein, A (2020), Models in Microeconomic Theory, Open Book Publishers
• Mun˜oz-Garcia,Felix (2017) Practice Exercises for Advanced Microeconomic Theory, MIT Press
• Dunaway, Eric; Strandholm, John C., Espinola-Arredondo, Ana and Munoz-Garcia, Felix (2020)
  Practice Exercises for Intermediate MicroeconomicTheory, MIT press

Syllabus for Intermediate Micro Economics – I as Prescribed by University of Delhi