Consider a consumer with the utility function given by U(X, Y) = XY where X and Y represent the two goods of consumption priced at Px and Py, respectively. The income of this consumer is assumed Rs 120, Px = Rs. 3 and Py = Rs.1. Suppose price of good X falls to Rs. 2.50, what will be its impact on consumption quantities of both the goods. 

Make distinction between any three of the followings: 
(i) Weak preference and strong preference
(ii) Numeraire good and non-discrete good
(iii) Homogenous function and Homothetic function
(iv) Compensating variation and Equivalent variation. 

(b) Consider a consumer with the utility function given by U(X, Y) = XY where X and Y represent the two goods of consumption priced at Px and Py, respectively. The income of this consumer is assumed Rs 120, Px = Rs. 3 and Py = Rs.1. Suppose price of good X falls to Rs. 2.50, what will be its impact on consumption quantities of both the goods. 

. Consider A Firm facing the demand schedule P = 190 – 0.6q and the total cost function
TC = 40 + 30q + 0.4q2

a) What output will maximize profit? 
b) What output will maximize total revenue? 
c) What will the output if the firm makes the profit of Rs. 4,760

Given the utility function of a consumer, U = 4 A0.5 B 0.5, he spends all his income amounting Rs. 120 on the two goods A and B. Good A costs Rs. 10 a unit and B Costs Rs. 15. What combination of A and B will be purchased by him?

What is the distinction between short run production function and long run production function? Explain with example and diagram the various stages of total product associated with law of variable proportions.

What is consumer’s surplus and how it is measured? Explain with illustration.