Description
BECC -105 INTERMEDIATE MICROECONOMICS-I
Tutor Marked Assignments
Course Code: BECC-105
Assignment Code: Asst /TMA /2024-25
Total Marks: 100
Assignment 1
Answer the following Descriptive Category questions in about 500 words each. Each question carries
20 marks. Word limit does not apply in case of numerical questions. 2
1. (a) Decompose the Price Effect into Slutsky Substitution and Income effect for an inferior
commodity. Use diagram to show the same.
(b) Differentiate between Risk aversion and Risk neutrality. How does insurance help in reducing
risk? Show with an example.
2. (a) What is an Isoquant? Explain the properties of an Isoquant. How do you define the economic
region of production? Explain using diagram.
(b) Consider a market for good X represented by the following demand function, q = 125
– 20 P. Now assume the market price of this good to be Rs. 5, calculate
a) The initial consumer’s surplus at market price of Rs. 5.
b) The change in consumer’s surplus when price falls to Re 1.
c) The gain due to fall in price to the consumers who could buy at old price of Rs. 5 (that
is, the gain to the old buyers); also the gain to the new buyers of good X at lower price
of Re 1.
Assignment 2
Answer the following Middle Category questions in about 250 words each. Each question carries 10
marks. 3
3. Consider the following Cobb-Douglas utility function
U(x1, x2)= x1
2
x2
2
P1= 10, P2= 5
Where x1 and x2 are the two goods and P1 and P2 are their respective prices.
(i) Determine the optimal choice of consumption of x1 and x2
(ii) Find the expression for Indirect Utility Function
4. What is meant by “Cost Minimisation”? Explain how a rational producer maximizes his profits
using Isoquant and Isocost line.
5. State and explain the two fundamental theorems of welfare economics.
Assignment 3
Answer the following Short Category questions in about 100 words each. Each question carries 6
marks. 5
6. List the three important properties about preferences. When are preferences said to be “wellbehaved”?
7. If production function is given by Q =10 √
(i) Calculate the elasticity of output with respect to labor (L)
(ii) Calculate the elasticity of output with respect to capital (K)
(iii) What kind of returns to scale does it exhibit?
8. What are the two approaches to profit maximization under perfect competition? If TR= 400Q –
2Q2
, TC= 1800 +50Q + 3Q2
. Find the profit maximizing level of output for the firm.
9. What is a Walrasian equilibrium? Explain how a “non-competitive equilibrium is inefficient”.
10. Write short note on any three
(i) Compensating Variation
(ii) Certainty Equivalent
(iii) Labor- deepening Technical Progress
(iv) CES production function
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