Pokhara University || Introductory Microeconomics || Fall 2020 || BBA/BBA-BI/BCIS/BHCM/BBA-TT

Introductory Microeconomics

This is the question set along with answers of Introductory Microeconomics Fall 2020, for the first semester which was taken by Pokhara University.

Level: Bachelor Semester: Fall Year: 2020
Program: BBA/BI/BCIS/BHCM/BHM/TT Full Marks:100
Course: Introductory Microeconomics Pass Marks:45
Time: 3hrs


 Candidates are required to give their answers in their own words as far as practicable.
The figures in the margin indicate full marks.


Section “A”

Very short Answer Questions                                                                                                                       10×2

1. What is meant by scarcity in economics?
2. Let a consumer selects two goods i.e., X and Y for consumption having price Rs.200 and Rs.100 respectively and fixed income with Rs.1000. Draw a budget line.
3. Point out major reasons behind the shift in a demand curve.
4. Let cost function (c)=1250+32Q+0.25Q^2, What is the fixed cost?
5. Write any four sources of monopoly.
6. What is the non-price competition?
7. List four causes of wage differentials.
8. Why MR (Marginal Revenue) and Average Revenue (AR) are not equal under imperfect competition?
9. What is meant by price discrimination?
10. Why Average Factor cost (AFC) and Marginal Factor Cost (MFC) are equal in the labor market?


Section “B”

Descriptive Answer Questions

Attempt any six Questions

11. “Scarcity is the main root cause of basic economic problems”; how the link between scarcity, choice, and opportunity cost can be explained in the production possibility curve.
12. Consider the following table.

a)     Complete the above table.




Quantity Total






Marginal Revenue Profit
11 0 10
10 1 12
9 2 17
8 3 21
7 4 26
6 5 33
5 6 43
4 7 60
3 8 80


b)    Derive the TR and TC curves according to the table.

c)     Derive profit and identify the maximum profit.

13. Consider the following data.

No of labors 1 2 3 4 5 6 7 8
Total Product 40 100 180 240 280 300 310 300


a)     Compute Ap and MP.

b)    Graph TP, AP, and MP.

c)     Explain the relationship between AP and MP.

14. Explain the marginal productivity theory of wage.
15. What is the indifference curve? Explain the various properties of the indifference curve.
16. Discuss the determination of equilibrium price and output under perfect competition.
17. Why does the individual labor supply curve bend backward? Explain and illustrate with a diagram.


Section “C”

Case Analysis

18.Read the case situation given below and answer the questions that follow:

An unexpected fall in the price of mushrooms led to customers purchasing up more than their usual quota. Even though prices rebounded in a week, the popular vegetable is still a bargain. This week the price of mushrooms rose to Rs.95-100 per kg, but it is still a bargain considering that the price hasn’t waved from the neighborhood of Rs.250 for the past decade, according to traders.

Vegetable sellers attributed the plunge in price to a supply glut with mushroom shipments from several places hitting the market at the same time. A seller said that an oversupply of mushrooms from farms in the valley and lowered consumption brought down prices in the past few days. Other sellers source their stocks directly from the farmers, thus eliminating the middleman and extra costs.

Prices started siding over the past month. A single mushroom trader is bringing 500-600 kg to the market daily, which is a lot of mushrooms. This is also the peak season for mushrooms and the number of farmers doing commercial mushroom farming had increased in recent years, leading to overproduction during the peak season.

In the past, the price used to decrease up to Rs 70-80 per kg, and that also for a few days only; but this time, it has plunged to the market at the same time which has brought down prices.


i)According to the case, what are the causes behind the decline in mushroom prices?

ii)Suggest different ways of preventing the prices from plunging further.

iii)Based on the case, what can you say about the elasticity of mushrooms?

iv)Draw an appropriate diagram to show how oversupply and under consumption of mushroom works simultaneously to affect prices and quality.



This is the question set along with answers of Introductory Microeconomics Fall 2020.

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