9e02102fe75047a6977a619f430c231f

Final Exam (Take-Home) Summer - 2020
Student Name: Reg. ID:
Program: BBA Instructor: DR. AZKA

AMIN / AFAQUE
HUSSAIN / DR AMEENA
SIBGHATULLAH /
FARUKH WAZIR / FAISAL
SALEEM
Subject: Microeconomics Max. Marks: 30
Q. No. 1 2 3 4 5 6 7 Total
Total Marks 1 2 6 5 4 7 5 30
Obtained Marks
Department of Business Administration
Please follow the instructions carefully:

1. Write your answers in a Word file or any other format specified by the instructor and
upload the file before the due date on LMS.
2. Write your name and registration ID on the first page of your Word file.
3. Answer scripts can be uploaded on LMS any time before its deadline. Therefore,
do not wait for the last hour to avoid any unforeseen problems.
4. Submission of answer copy(ies) will be considered acceptable through LMS only.
Therefore, do not submit your document through email or any other medium.
5. Use 12 pt. font size and Times New Roman font style along with 1-inch page
margins.
6. Follow the requirements of the word limit and the marking criteria while writing your
answers.
7. Provide relevant, original and conceptual answers, as this exam aims to test your
ability to examine, explain, modify or develop concepts discussed in class.
8. Do not copy answers from the internet or other sources. The plagiarism of your answers
may be checked through Turnitin.
9. Recheck your answers before the submission on LMS to correct any content or
language related errors.
10. Double check your word file before uploading it on LMS to ensure that you have
uploaded the correct file with your answers.
Question # 1: (1 Mark)
a. Discuss three examples of important trade-offs that you face in your life. (0.5 Marks)
b. Discuss the items you would include to figure out the opportunity cost of a vacation to
Northern Pakistan? (0.5 Marks)
Question # 2: (2 Marks)
a. Draw and explain a production possibilities frontier for an economy that produces cheese and
milk. What happens to this frontier if a disease kills half of the economy’s cows? (1 Mark)
b. Use a production possibilities frontier to describe the idea of “efficiency.” (1 Mark)
Question # 3: (6 marks)
The number of taxicabs in Motorville and the taxicab fares are regulated. The fare currently
charged is Rs.500 a ride. Motorville taxicab drivers want to obtain government's permission to
raise the fare to increase their revenues and ask you to be their economic adviser. After studying
the market, you come up with the following demand schedule for taxicab rides:
Price (Rupees per ride) Quantity demanded (rides per month)

300 160
400 120
500 80
600 40
700 0
(i) Calculate the price elasticity of demand for taxicab rides as the fare rises from Rs.500 to
Rs.600. Is the demand price elastic or inelastic for this fare rise? (2 Marks)
(ii) What happens to the taxicab drivers' total revenue if the fare rises from Rs.500 to Rs.600?
How can you use your answers in part “a” to answer this question? Should the drivers try to
obtain permission to raise the fare? (2 Marks)
(iii) Calculate the price elasticity of demand for taxicab rides as the fare falls from Rs.500 to
Rs.400. Is the demand price elastic or inelastic for this fare decrease? (2 Marks)
Price per Ice-cream (Rs.) Demand for Ice cream (Qd) Supply for Ice cream (Qs)
140 500 1500
120 750 1200
100 1000 1000
80 1250 750
60 1500 600
40 1750 300
(i) Draw the market equilibrium for Ice cream. (2 Marks)

(ii) Find out equilibrium price and quantity. (0.5 Marks)
(iii) Is there surplus or shortage in the market at price Rs.40? At price Rs.120? (0.5 Marks)
(iv) What is the maximum price that consumer is willing to pay for 1500 bottles? (1 Mark)
(v) What is the minimum price that producer is willing to accept for 1500 bottles? (1 Mark)
Income of a person is Rs.8000 and he uses 60 units of a commodity.
1. Calculate income elasticity of demand when the income increased by 30% and
consumption of the good is decline by 50%. (1 Mark)
Also calculate
2. New income (1 Mark)
3. New consumption (1 Mark)
4. Nature of good (1 Mark)
a. Complete the following table. (2.5 Marks)
Units TFC TVC TC AFC AVC AC MC

0 24 0
1 24 28
2 24 54
3 24 75
4 24 96
5 24 126
6 24 168
7 24 214
8 24 264.
b. Draw AFC, AVC, AC, and MC on a graph. (3 marks)

c. Explain the relationship between AC and MC. (1.5 Marks)
Question # 7: (5 Marks)
a. Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of
output that maximizes profit. At that level of output, show on your graph the firm’s total
revenue and total cost. (2 Marks)
b. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost
curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing
price, and the amount of profit. (2 Marks)
c. Why the demand curve for a firm operating in monopolistic competition is more elastic
compared to the firm operating as a monopoly. (1 Mark)

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Final Exam (Take-Home) Summer - 2020

Student Name: Reg. ID:

Program: BBA Instructor: DR. AZKA

Subject: Microeconomics Max. Marks: 30

Department of Business Administration

Please follow the instructions carefully:

Price (Rupees per ride) Quantity demanded (rides per month)

(i) Draw the market equilibrium for Ice cream. (2 Marks)

Income of a person is Rs.8000 and he uses 60 units of a commodity.

a. Complete the following table. (2.5 Marks)

Units TFC TVC TC AFC AVC AC MC

b. Draw AFC, AVC, AC, and MC on a graph. (3 marks)

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