Pokhara University || Spring 2015 || Introductory Microeconomics || BBA\BCIS

This is the question set along with answers of Introductory Microeconomics spring 2015, which was taken by the Pokhara University.

POKHARA UNIVERSITY – Introductory Microeconomics spring 2015

Level: Bachelor                                               Semester: Spring                          Year:2015

Programme: BBA/BBA-BI/BCIS/BHCM/BBA-TT                                             Full Marks: 100

Course: Introductory Microeconomics, Spring 2015                                               Pass Marks: 45

Time: 3 hrs

Section “A”

Attempt all questions.

Pokhara University

Section “A”

Attempt all the questions.

10×2

1. Why is scarcity a central problem of economics?
2. Differentiate between positive and normative economics.
3. Define the market demand schedule and curve.
4. State the relationship between AC and MC.
5. What are Giffen goods?
6. Define price discrimination?
7. When does the firm get higher profit according to the TR-TC approach?
8. What are the factors causing oligopoly?
9. State the law of variable proportion.
10. What is a bilateral monopoly?

The answers to the above 10 questions

Section “B”

Attempt any six questions

6×10

11. Discuss the fundamental principles of economics.
12. Suppose, the demand function Qd=1000-20p and supply function Qs=100+40p, then fill the table given below. Also, find equilibrium price and quantity and show them in the graph.

 Price(Rs) Quantity demanded(Qd) Quantity Supplied(Qs) 5 10 15 20 25
13. Define the indifference curve. Explain its properties.
14. Explain the equilibrium of a firm under the least cost combination.
15. A firm’s cost function and revenue function are given as

C=25+3

P=50-2Q

Find profit-maximizing output and total profit. Also, find MC and MR.

16. How price and output are determined under monopolistic competition?
17. State and explain the relationship between the minimum wage rate and brain drain in the Nepalese context.

18.

Section “C”

Case Analysis

The price of vegetables in Kathmandu Valley has increased by over 100 per cent in comparison to the last year due to the falling supply as production has been affected by the unexpected rainfall before and after the Dashain festival.

The Kalimati Fruits and Vegetables Market Development Board said the price of potato, onion, cauliflower, cabbage, radish, brinjal, ginger, garlic and others has been continuously rising since the last year.

The price of onion, for which we have to depend on India, has increased the most in the past year as its price escalated even in India. Its wholesale price has increased astronomically from Rs 27.40 a year ago to Rs 112 on Wednesday. Its price was Rs102 last month and Rs 97 a week ago.

The wholesale price of ginger also rose by 231 per cent from Rs 43.80 a year ago to Rs 145. It was Rs 105 a month ago and had increased by Rs 50 to Rs 155 a week ago. The majority of internally produced ginger had been exported last week even as it was being sold at a high price in the domestic market. The price of both ginger and onion has skyrocketed as we have not been able to produce them domestically. The price of other vegetables has risen due to the fall in production owing to the rainfall. The price of many vegetables fluctuates according to season.

The price of tomato, however, has fallen by 23 per cent from Rs 42 last year to Rs 32 on Wednesday. It was Rs 33 a month ago and had increased to Rs 45 a week ago.

Consumers write to the chief secretary for control of inflation

The National Consumers’ Forum has written to Chief Secretary to control the unnatural price hike of vegetables in the market. The President of the forum revealed the letter has been sent stating that the businessmen have artificially raised the price of essential goods during the festival season and ahead of the upcoming Constituent Assembly (CA) election. He said the price has increased by 20 to 30 per cent.

The forum has urged the chief secretary to take solid steps immediately and to bring those involved in black-marketing to the book stating that there has been an unnatural hike in the price of potato, onion, radish, cucumber, vegetable oil, mustard oil, sugar and fruits. The forum has concluded that the businessmen have artificially raised price capitalizing on the lack of monitoring during the festival season.

Questions:

1.     What are the factors responsible for the rise in the price of vegetables? Why do you think there has been a fall in the price of tomato?

2.     What is the reason behind the rise in the price of onion? Explain by using a suitable diagram of the demand and supply curve.

3.     Is the demand for onion price elastic or price inelastic over the price range in the article? How do you know?

4.     Do you think the elasticity of ginger (with respect to price) will be greater in the long run compared to the short run? Why?

5.     Give your suggestion regarding price control of the vegetables.

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