This is the question set along with answers of Introductory Microeconomics  Fall 2019, which was taken by the Pokhara University.

POKHARA UNIVERSITY – Introductory Microeconomics Fall 2019

Level: Bachelor                                               Semester: Fall                          Year:2019

Programme: 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. ( 10×2)

1. Difference between positive and normative economics.
2. Estimate the linear demand function if the intercept parameter is 40 and the slope of demand function is 4.
3. Define the marginal rate of substitution.
4. Mention the Relationship between Average cost (AC) and Marginal cost (MC).
5. State the behavior of TP, AP, and MP in the first stage of production.
6. Mention the condition of 3rd-degree price discrimination.
7. Why are AR and MR curves horizontal straight line under perfect competition?
8. Lis out the feature of oligopoly.
9. Define the bilateral monopoly.
10. Define VMPL

Section “B”

Descriptive Answer Question

Attempt any six-question . (6×10)

1. Define microeconomics. Explain the types of economics.
2. Suppose that your demand schedule for the T-shirt is as follows

1. Calculate your price elasticity of demand as the price of a T-shirt increases from Rs. 5 to 8 when your income is Rs. 12000.
2. Calculate your income elasticity of demands as your income rise from 12000 to 15000 if the price is Rs.8.
3. Define the cardinal utility approach. Explain how a consumer attains maximum satisfaction under the cardinal utility approaches.
4. Explain the method of finding out the least-cost combination of inputs under the production theory.
5. Calculate TVC, TC, AFC, AC, and MC from the given information. TFC = Rs. 100

1. What is a monopolistic competition? How are price and output determined under it?
2. Why is brain drain increasing day by day in Nepal? How can it be controlled? Discussed.

Section “c”

Case Analysis (1×20)

1. Read the case situation given below and answer the question that follows:

Price of groundnut oil has moved up by over five percent in the wholesale market over the last five days on back of considerable festival demand and shortage of raw material for crushing, while in the retail market, it has gained by nearly three percentage “The main reason for the recent price rise is shortage of quality groundnut for crushing and festival demand. The new arrival has started coming in but the quality is not that good. Low availability of old groundnut and increase crushing on the back of high production has also aided as price rise said, “ Samir Shah, president, Saurashtra oil Mills Association (SOMA) over the past five to six days, price of loose groundnut oil has risen by about Rs 50 or 6.75 percent to Rs 780 – 790 per 10 kg from RS 735 – 740 per 10 kg a week ago in the wholesale market. In the retail market, the price has picked up owing to good festival demand. Price of a new 15- kg groundnut oil tin has increased by Rs 50 and torched Rs 1.365-1,370. It traded at Rs 1,315 – 1,320 per 15 kg last Wednesday. The demand for oil has also improved in one week. It doubled from last week’s demand of 30 – 35 tonnes a day to 100 – 110 tonnes a day. Reacting to the current rise in price, Suresh Kaneriya, Managing Director, KAneriya Oil Industries said, “Last season was very for groundnut oil as the price was low throughout the year because of high production. Low price diverted many people from other edible oils to groundnut oil. Currently, prices are down compared to the previous year and this has ramped up demand ahead of some festivals. “Though new arrival of groundnut generally begins from mid – September, this year it is a bit late. Moreover, old stock is also in a small amount. While, demand for peanuts is also good this time, resulting in a shortage of groundnut for crushing. At present, the daily arrival of new groundnut is about 22,000 – 25,000 bags (a bag of 30kg). Due to the shortage of raw material, many groundnut oil mils have not yet begun crushing. Industry sources say hardly 10 – 15 mils are currently started crushing.

Question

1. How was the price of groundnut oil increased in the wholesale and retail market? why?
2. Show the effects of change in supply and demand for groundnut oil at equilibrium price with the help of diagrams and explain with reason.
3. Why did the demand for ground oil increase even though the price has increased? Justify.
4. Discuss the problems faced by the industries.