IGNOU BECC-101 December 2025 Previous Year Question Paper

Q1.(a) “Economics is a _ science of choice making.” Explain the relationship between scarcity and choice in the light of this statement. 10

(b) The demand for ice-cream is Qq 5 70-47 and the supply of ice-cream is Q, = 10 + 2P, where P is the price of ice- cream. 10 @) Find the equilibrium price and quantity of ice-cream.

(ii) Suppose the consumers’ income increases and ice-cream is considered a normal good. As a result the demand curve for ice- cream becomes Q, = 100 — 4P. Find the new equilibrium price and quantity of ice-cream.

Q2.(a) Consider Sophia and Marcus’ total expenditure on sandwiches : 15 Total Expenditure (per month) Price 5 90 % 50 Gi) Use the midpoint formula to calculate the price elasticity of demand for Sophia when the price of sandwiches increases from % 4 to

(ii) Use the midpoint formula to calculate the price elasticity of demand for Marcus when the price of sandwiches increases from % 4 to

(iii) Based on your answers from parts

(6) and

(ii), explain why Sophia would spend more on sandwiches, while Marcus spends less when the price of sandwiches increases.

(b) Brazil is the world’s largest coffee producer. There was a severe drought in Brazil in 2013-14 that damaged Brazil’s coffee crop. The price of coffee beans doubled during the first three months of

Q3.Draw and discuss a supply and demand diagram to explain the increase in coffee prices.

Q4.(a) Distinguish between returns to variable proportions and the returns to scale. (Diagram is required) 15

(b) Show that if the indifference curves were concave to the origin the consumer would never consume both the goods together. (Diagram is required)

Q5.(a) A firm is operating at a loss. Explain why the firm might stay rather than exit the market. (Diagram is required)

(b) Discuss the Sweezy’s model of ‘kinked demand curve’.

Q6.(a) How does the Labour-Leisure trade-off determine the supply of labour ? 6

(b) The total revenue from the sale of Q is given by the equation : R= 100 Q- 2Q2. Calculate the point elasticity of demand when marginal revenue is 20.

Q7.Critically examine cardinal utility approach.

Q8.Explain the Hicksian technique of splitting the price effect into its components of substitution and income effects for a

(0) Normal good and

(ii) Giffen good.

Q9.(a) What is the condition for the producer’s equilibrium when a single variable factor is in use ? 6

(b) Constant returns to scale implying decreasing returns to a variable factor. Discuss. (Diagram is required)

Q10.Obtain the long-run average cost (LAC) and the long-run marginal cost (LMC) curves from the respective short-run cost curves, as implied in the traditional theory of cost. (Diagram is required)

Q11.Write short notes on the following : 6+6

(i) Prisoner’s dilemma

(ii) Degrees of price discrimination

Q12.Explain the Stackelberg’s model.

Q13.Explicate the Modern Theory of Rent.