BBS Microeconomics for Business

Business economics normative in character. Why?

What is microeconomics? Explain its uses in solving operational problems faced by business firms.

Write any four uses of microeconomics.

Describe the nature of business economics.

What are the characteristics of business economics?

Describe the nature of microeconomics.

Why does production possibility curve slope concave downwards?

Describe the nature and scope of business economics.

What are the uses of microeconomics?

Write any four principles of economics.

Explain the economics tools that help to measure economic efficiency.

a. Complete the table and determine equilibrium price and quantity . [3.5]

b. What Will be effect on equilibrium price and quantity when demand and supply function increase to Qd'x=120-5Px and Q'sx = 40+5Px, respectively ? [3.5]

c. Compute price elasticity of demand at both equlibrium price and compare the results . [3]

Consider the demand function, \( Qd = a - bP \) and interpret the components.

Explain the factors that cause shift in supply curve.

Consider the supply function \( Qs = a + bP \) and interpret the components.

Explain the factors that cause shift in demand curve.

Write any four factors that cause rightward shifts in demand curve.

What is an economic efficiency? How can it be measured?

Consider the following table:

a. Derive linear demand and supply functions. 
b. Graph Qsx and Qdx and determine equilibrium price and quantity. 
c. Compute price elasticity of supply at movement from B to D and D to B by (i) percentage method and (ii) arc method. Which method is more appropriate and why? 
d. How do business firms use the concept of price elasticity of demand in business decision making? Explain. 

Define consumer's surplus?

Explain the scope of business economics.

How is price elasticity of supply computed by arc method?

Prepare a list of uses of price elasticity of demand in taking business decisions.

Let, eXY = 4 and eAB = -0.8. Describe the nature of goods X and Y and goods A and B.

Consider the following demand schedule:

a) Compute the income elasticity of demand at movement from B to D and D to B by proportion method 

b) Compute the income elasticity of demand at midway between B and D and D and B by arc method. Why is arc method considered as more appropriate method than proportion method? 

c) How do firm use price elasticity of demand in business decision making? Explain with suitable examples.

State the relationship between TR and price elasticity of demand.

Consider the following supply schedule:

a. Compute the price elasticity of supply at movement from B to D and D to B by proportion method. 
 b. Compute the price elasticity of supply at midway between B and D and D and B by arc method. Why is arc method considered as more appropriate method than proportion method? 
c. How do firms use price elasticity of demand in business decision making? Explain with suitable examples. 

Let, \( ey(\text{mobile set}) = 2.3, ey(\text{potato}) = -0.8 \). Describe the nature of these two goods.

Write formula for calculation of elasticity of supply by using average method.

a) Demand function of Chokobite Chocolate is \( Q_d \) = 1000 - 20P and supply function of Chokobite chocolate \( Q_s \) = 100 + 40P, find equilibrium price and quantity of Chokobite chocolate. Also compute price elasticity of demand at equilibrium price.

b) Fill the following table by using the demand and supply function of Chokobite chocolate and find equilibrium price and quantity of Chokobite chocolate in table.

Aradhya's demand schedule of ice-cream is given as:

a. Calculate price elasticity of demand of ice-cream for Aaradhya when the price of ice-cream increases from Rs. 180 to Rs. 220 at both income levels Rs. 20,000 and Rs. 25,000.

b. Calculate income elasticity of demand of ice-cream for Aaradhyas income increases from Rs. 20000 to Rs. 25,000 at prices Rs. 180 and Rs. 220.

c. Compare and interpret the above results.

Write any four assumptions of indifference curve.

 Let a consumer selects two goods, i.e. x and y for consumption having prices of Rs. 1600 and Rs. 800 respectively and fixed income with Rs. 16,000.a. Derive budget line and determine equilibrium point when he allocates entire budget equally on two goods.b. Let, price of x good falls to Rs, 800. Derive the two budget line and determine new equilibrium point when he spends Rs. 6,400 on x good and Rs. 9,600 on y good.c. Derive price demand curve for x good. 

State the condition for equilibrium under cardinal approach.

Explain the income effect for inferior and normal goods.

Write any four assumptions of cardinal approach.

Explain the price effect for normal substitutes. How can it be decomposed into income and substitution effects? Explain.

List out any four assumptions of indifference curve analysis.

What is price effect? How can it be decomposed into income effect and substitution effect?

Derive budget line if budget of consumer is Rs. 10000, Price of good X is Rs. 100 and price of good Y is Rs. 200.

Explain the consumer's equilibrium by using indifference curve approach.

What are the causes for the operation of law of increasing returns to scale?

Using IQ map and Iso-cost line, explain the concept of least cost combination of two inputs under given total cost outlay. What will be the effect on output when total cost outlay changes? [10+5]

Prepare a list of assumptions of isoquant.

Consider the following production schedule:

a. Compute AP_L  and MP_L

b. Graph TP_L  AP_L  and MP_L  and explain three stages of production with proper reasons

What are the causes for the operation of the law of increasing returns?

Describe the significance of production function in business decision-making. How do firms achieve optimal employment of two variable inputs? Explain.

Let \( c = \text{Rs. } 2000, r = \text{Rs. } 50, w = \text{Rs. } 40 \). Determine the slope of iso-cost line.

Let, production function, \( Q = 14L + 7L^2 - L^3 \). Compute TP, AP and MP, graph them and explain three stages of production with proper reasons.

What is production function?

Explain the laws of returns to scale.

Write any two examples of explicit costs.

How is economies of scope measured?

Let Cost function TC = 50+6Q², Revenue function TR = 100Q - 4Q².a. Compute TFC, TVC, TC, TR and profit at output range of 0 to 10 units. [5]b. Using schedules, explain the behaviour of TFC, TVC and TC with proper reasons. [5]c. Graph TR, TC and profit, and explain TR- TC approach of firm equilibrium. [5]

What are the characteristics of LAC?

Write any four examples of accounting cost.

Write any two relationships between price elasticity of demand and marginal revenue.

Consider the following cost schedule:

a) Graph AFC, AVC and AC and explain their behavior. 

b) Is the trend of AC is influenced by law of variable proportions? Explain

Why is LAC - U shaped?

Write any four examples of explicit costs.

How is degree of economies of scope computed?

Let revenue function, \( TR = 100Q - Q^2 \), cost function, \( TC = 50 + 6Q^2 \)

a) Compute\( TR \), \( TC \) and profit \( \pi \) at the output range of 0 to 10 units.

b) Graph \( TR \), \( TC \) and \( \pi \) and explain profit maximization goal of the firm.

Consider the following cost schedule:

a) Graph TFC,TVC,and TC and explain their behavior . 

b) Is the trend of TC or TVC is influenced by the law of variable proportions ? Explain . 

Let, \( C_A = \text{Rs. } 400000, C_B = \text{Rs. } 200000, C_{A+B} = \text{Rs. } 500000 \). Determine degree of economies of scope.

Prepare a list of examples of explicit costs.

State the relationship between price elasticity of demand and marginal revenue.

Consider the following cost schedule:

 a. Compute TC, AFC, AVC, AC and MC at TFC = Rs. 200.
 b. Graph AC and MC and describe their relationship.

Differentiate between economic cost and accounting cost.

Complete the following table, Graph AR and MR and explain the relation between AR and MR curve.

Write the formula for pricing the product under cost - plus pricing.

 Describe the characteristics of oligopoly. How are the price and the output determined under cartel? 

Mention the types of oligopoly.

Derive shortrun supply curve of a competitive firm.

How are the price and the output determined under monopoly in short run? Is monopoly price is always higher than competitive price? Give reasons.

Prepare a list of characteristics of oligopoly.

How is the price determined under "joint profit maximization cartel"? Explain.

Why do firms involve in cartel?

Explain the concept of incremental cost pricing with suitable examples.

State the characteristics of monopolistic competition. How are the price and the output determined under it in short-run? In what respects, monopolistic competition differ from perfect competition?

What is meant by predatory pricing?

Calculate the equilibrium level of output of the firm when marginal revenue is MR = 300 - 0.002Q and marginal cost is MC = 20 + 0.0008Q

How price and output is determined under joint profit maximization goal of cartel?

What is monopoly? How the price and output is determined under it?

Let Q = 14L + 7L² - L³. Compute VMPL at P = Rs. 10 and L = 5 units.

Economic rent is the surplus of actual earnings over transfer earnings. Explain with suitable examples.

Identify the factors that cause wage differentials and explain them. 

\( \begin{matrix} 1 & 2 & 3 \\ 2 & 5 & 1 \\ 9 & 3 & 2 \end{matrix} \)

What are the determinants of supply of loanable funds?

What are the factors that cause interest rate differentials?

Explain the concept of accounting profit and economic profit with suitable examples.

Define value of marginal productivity of labour.

What is economic rent? How is it determined?

What are the causes for interest rate differentials?

What are the motives of demand for money according to Keynes? Explain.

What are the dynamic changes to arise the profit?

Explain the liquidity preference theory of interest. What are its criticisms?