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BAHRIA UNIVERSITY (KARACHI CAMPUS)
Midterm Assessment Assignment Spring 2020
Course Title: MICROECONOMICS
Course Code:
Class/Sec:
Course Instructor: Syed Kamran Abbas
BS-(A & F).
Submission: Latest by 31 May 2020
Max Marks: 15
Student’s Name: ____________________
Reg. No: _________
Assignment Guidelines by the Teacher

Assignment Submission: Computer Typed

Any other as per nature of the subject
QUESTION 01
3 marks
Which of the following statements are true or false? Explain each statement breifly with reason
either it is true or false.
i. When the marginal utility of a consumer becomes negative at a particular unit, its total utility
increases with increasing rate.
ii. If the income elasticity of a commodity is equal to -0.5, then the commodity is considered as
normal good.
iii. Among all factors of production labour is an important who bears all the risk during
production.
Questions:2
3 Marks
As we know that due to economic slumb there is decline in overall purchasing power of
consumer. Explain these question with help of your practical knowledge. Draw a graph of
demand curve to show the effect of following event.
i. When the price of goods falls, and price of other goods and consumer income remain same
what happen with consumption/demand of that goods whose price falls and other goods (both are
substitutes for each other).
ii. If consumer’s income increase and both goods are normal how the quantity consumption of
these goods effects.
iii. Draw a consumer equilibrium with the help of indifference curve and budget line.
2
QUESTION 03
The table sets out the supply schedule of jeans.
Price (dollars per pair)
120
125
130
135
3 marks
Quantity Supplied (millions of pairs)
24
28
32
36
a. Calculate the elasticity of supply, when the price rises from $125 to $135 a pair.
b. Draw a supply curve with the help of above table.
c. Is the supply of jeans elastic, inelastic, or unit elastic?
QUESTION 04
3 marks
Jake has budget of $10 per week to spend on study and games. The table shows his marginal
utility from each good/services.
Quantity Per Week
Marginal Utility from Study
Marginal Utility from Games
1
14
20
2
12
16
3
11
12
4
10
8
5
9
4
6
8
3
7
7
2
8
6
1
a. Calculate his total utility from study and games with the help of their marginal utilities.
b. Prove with the help of graph that their marginal utilities have diminishing marginal utilities.
c. If the price of a studying per course is $1 and the price of per game is $2, what are his
affortable combinations of commodities.
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Q.5 Read this case study carefully and give the answer of the following questions.
3- Marks
i. Draw a graph to present market equilibrium of coffee.
ii. If there is poor harvests of premium coffee beans, what will the expected equilibrium and
price.
iii. What will be the cross price elasticity between Arabica coffee and beans?
****Good Luck****