# BECC-101 INTRODUCTORY MICROECONOMICS in English Solved Assignment 2020-2021

Contents

## BECC-101 INTRODUCTORY MICROECONOMICS Solved Assignment 2020-2021

BECC-101 : INTRODUCTORY MICROECONOMICS
Tutor Marked Assignments
Course Code: BECC-101
Assignment Code: Asst /TMA /JAN 2020
Total Marks: 100

Title Name

#### BECC-101 Economic Solved Assignment 2020-21

University IGNOU
Service Type Solved Assignment (Soft copy/PDF)
Course BAG(Economic)
Language ENGLISH
Semester 2020-2021 Course: BA(Economic)
Session 2020-21
Short Name BECC-101 (ENGLISH)
Assignment Code Asst /TMA /JAN 2020
Product Assignment of BAG(Economic) 2020-2021 (IGNOU)
Submission Date Coordinator of your study centre. This assignment is valid for January 2020 admission cycle;

and the assignment is to be submitted latest by September 30, 2020.

Assignment One
Answer the following Descriptive Category questions in about 500 words each. Each question
carries 20 marks. Word limit does not apply in application part of the question.
2 × 20 = 40
1. (a) “A perfect competitive firm incurring losses in the short-run may loose even more by shutting
down.” Discuss. 10
(b) Consider Figure 1 below where MC, ATC, AVC, D, and AR represent the marginal cost,
average total cost, average variable cost, demand, and average revenue curve respectively
under a perfect competition. Based on the figure, answer the following questions: 10
(i) What is the profit maximising level of output for this firm in the short-run? At this quantity,
what is the marginal revenue?
(ii) How much is the total cost for this firm in the short-run equilibrium?
(iii) In the short run, is the firm making economic profit or suffering loss? How much is that
profit or loss? Should the firm shut down?
(iv) What is the fixed cost of production faced by this firm?
(v) What is the break-even price for this firm? What is the shut down price for this firm?
(vi) If fixed cost increases further, what impact will this have on this firm’s profit maximising
level of output in the short run?
OR

(a) Using appropriate diagrams compare and contrast short-run equilibrium conditions with the
long-run equilibrium condition faced by a firm in perfect competition. 10
(b) A firm in a perfect competitive market structure faces a marginal cost function given by
MC(Q) = 4Q + 5
where Q represents quantity of output produced. This firm earns marginal revenue of Rs 25
on each unit sale of its output. Suppose this firm decides to produce 3 units of output, is this a
profit maximising decision by the firm? If not, how much should this firm produce to earn
maximum profits? In the long-run will this firm earn negative economic profits, positive
economic profits, or zero economic profits? 10
2. (a) Discuss the income and substitution effects of a price change in case of an inferior good. 10
(b) Consider the demand curve AC of a good in Figure 2. Given distance AB and BC as x and y,
units respectively,
(i) What will be the price elasticity of demand for the good at point B? What will be the price
elasticity of demand for the good at point A and at point C? 5
(ii) Given that price elasticity at point B is 1, how x and y will be related? 5
OR
(a) A Giffen good is a special type of inferior good. Do you agree? Give reason. 10
(b) (i) Consider Figure 3, where DD’ represents a rectangular hyperbola shaped demand curve
for a good. Find the price elasticity of demand for this good at point A and point B. 5
(ii) Given the price elasticity of demand for a good as 0.6. Suppose price of this good
decreases by 10%, what would we expect to happen to the quantity demanded? 5

Assignment Two
Answer the following Middle Category questions in about 250 words each. Each question carries
10 marks. Word limit does not apply in application part of the question.
3 × 10 = 30
3. Explain why a monopolist does not have a well-defined supply curve? 10
OR
A Monopoly faces market demand given by Q = 30 – P, where Q stands for quantity and P for
price. Total cost function is given by C(Q) = 2Q2
. Find the profit maximising price and quantity
and the resulting profit to the monopoly. Compare your results with the equilibrium quantity and
price of that of a perfect competitive industry. 10
4. Draw a kinked demand curve and show how a change in marginal costs may not affect the price
in the market. 10
OR
(a) Discuss the strategic decision making in Oligopoly markets. 5
(b) Differentiate between the assumptions of a Cournot’s model and the Stackelberg model. 5
5. (a) What is meant by the productive and allocative efficiency conditions for a firm? 5
(b) Is monopoly productively and allocatively efficient? 5
OR
(a) Discuss various forms of departures from the assumptions of a Perfect competitive market
structure. 5
(b) How does a Pigouvian tax works to solve the externality problem? 5
Assignment Three
Answer the following Short Category questions in about 100 words each. Each question carries 6
marks.
5 × 6 = 30
6. Illustrate the relation between the Value of Marginal product and Marginal Revenue product of a
factor under imperfect competition. 6
7. Compare and contrast Marshallian theory with the Ricardian theory of rent. 6
8. What is meant by derived demand of a factor? 6
9. Discuss the central problems of an Economy. 6
10. Explain the First Fundamental Theorem of Welfare Economics. 6