# Pokhara University || Spring 2017 || Introductory Microeconomics || BBA\BCIS

This is the question set along with answers of Introductory Microeconomics  Spring 2017, which was taken by the Pokhara University.

POKHARA UNIVERSITY – Introductory Microeconomics Spring 2017

Level: Bachelor                                               Semester: Spring                                 Year:2017

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

Course: Introductory Microeconomics                                                                 Pass Marks: 45

Time: 3 hrs

Section “A”

Very Short Answer Questions

Attempt all the questions.

1. Why microeconomics is called price theory?
2. What is meant by positive economics?
3. Calculate the price elasticity of supply by ARC method when price increases from Rs 5 to 10 and quantity supplies increases from 50 units to 80 units.
4. Make a list of properties of the indifference curve?
5. What will be the marginal product when the total product is constant?
6. Why LAC is ‘U’ shaped?
7. Write the condition of price discrimination.
8. What is bilateral monopoly?
9. What are the conditions of equilibrium of a firm under the MC-MR approach?
10. What is income consumption curve?

Section “B”

Attempt any six questions:

11. Explain the fundamental principles of economics.

12. What is the consumer’s equilibrium? Why the consumer gets maximum satisfaction when the indifference curve is tangent to the budget line?

13. The demand curve of a firm’s product is given by an equation Q=28-0.5P while the cost function is TC= 50+2Q+0.25Q2

Find the profit-maximizing output and total profit.

14. Suppose the price of commodity X is Rs. 1000 and the price of commodity Y are Rs. 500 and a consumer has Rs. 20000 to spend per month on good X and Y.

a. sketch the budget constraint.

b. Assume that he splits his income equally between X and Y. Show where the consumer ends up on the budget constraints.

c. Suppose that income rises from Rs. 20000 to Rs. 40000 sketch the new budget constraint.

d. Assume that he again splits the total budget equally on two goods. Show where the consumer ends up on the new budget constraint.

15. Explain the law of variable proportion with its three stages. Which stage is relevant for a rational producer?

16. What is monopolistic competition? Explain how price and output are determined under monopolistic competition in short run.

17. What is brain drain? Explain the causes and consequence of brain- drain in an underdeveloped country like Nepal.

Case Study

Most Nepali youngsters are going abroad to fulfil their goals in life. Due to lack of opportunities and chance in their own homeland, they are compelled to move to other countries in search of a good career and better living standards. Many Nepali adolescents are trying to leave their country for a prosperous and wonderful life abroad. Nowadays it has become a burning issue, and in such a terrible situation the government should make some policies to check such problems. It is true that students should get a chance to go abroad for their further studies, however, they should return to their own country after completing their studies or training. In this way, they can use their knowledge for the improvement of their own country. If the government does not pay attention to such problems, our country may suffer from a lack of young diligent, dynamic and knowledgeable manpower.

Going abroad for higher studies is a salient issue in Nepal’s context. According to the Ministry of Education, more than 47,000 students received a ‘No Objection letter this year an all-time high. Reports indicate that students were choosing to pursue further students in a total of 78 different countries. The top destination was Australia, followed by Japan and the US.
A common reason that the students are leaving the country is that the quality of education in Nepal is comparatively low. Other reasons are that there are not enough job opportunities here, the political situation is unstable and Nepali degrees are not recognized worldwide. But do students really go to foreign countries for quality education? If so, why don’t they back after completing their studies? Even though there is no reliable data on the number of students who return to Nepal once they finish their study abroad, it is likely that an overwhelming majority of them want to settle down in the countries where they receive their education. For instance, in an interview taken by the Nepal Times, a student said, “In the future, I see myself setting in Australia.” Another student added, has been two years now and even I plan to settle here (Australia). The third student went on to say. “I am currently doing
Nepal for further studies is not eager to come back. Bachelors in Accounting and Business. In the long run, I plan to settle here (Australia)” These interviews indicate that the students who are
The irony is that when students apply for a visa, all of the promise that they will come back to their home country immediately after their studies
They know that if they do not make this clear, they will not be sued a visa. But once these students enter the host country, they forget their promise. It should also be noted that the host countries themselves expect students to return to their homeland as soon as they complete the
studies. This is confirmed by a statement by the former Australian ambassador to Nepal, Glenn White, who said, “Td like lo think educational are so attracted to these foreign lands.
reputation is the reason people come to Australia and not for the sole purpose of Permanent Residency. The question is why Nepali Students are so attracted to these foreign lands.

Nobody can deny the fact that the political situation in Nepal is not stable, which can affect educational institutional here. But the quality of education here is not as low as people think. Education providers from the private sector pay considerable attention to maintaining the quality of education. Besides, there are many colleges that are affiliated with renowned foreign universities, the courses they offer are of international standards.
The problem of unemployment is another driving force for these students to leave the country. Data from the Central Bureau of Statistics indicate that in 2014, approximately four million people were without jobs that suit their qualifications and skills. Furthermore, between 40,000o 50,000 people, who have Bachelor’s and Master’s degrees were unemployed. Another study conducted by the International Labour Organization (ILO) on Nepali youth aged 15 to 29 shows that the unemployment rate among university graduates, at 26.1 per cent, is three times higher than that of the uneducated.
These ſgures point out that if university graduates got jobs of their choosing or one that is compatible with their qualifications, they would probably not leave the country in the first place, or even if did go abroad for further studies, they would come back and work in Nepal.
Earning foreign degrees, knowledge and skills is an excellent idea. Losing thousands of youths to other countries every year, however, is not a good sign, because these people are at the height of their productivity and are important for a developing nation like ours. The concerned departments must pay attention to this pressing issue.
Questions
a. What is brain drain and minimum wage?
b. Why is Nepal facing brain drain?
c. How does the brain drain affect the progress of Nepal?
d. What are the benefits if a country does not have a brain drain problem?
e. Is brain drain a problem for Nepal? If so, what are the possible measures to control?

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