PRINCIPLES OF MICROECONOMICS (HSS – 1021)

ASSIGNMENT – I

1st SEMESTER B.TECH.

Last Date for Submission of Assignment: - 22/Sep/2018
Instructions

1. Answer all the questions.

2. Top of the Assignment must contain Branch, Section, Regd. No. & Name of the
student, clearly.
3. Submit the assignment in A4 size paper, preferably to be written on both the sides,
hand written (stapled only).
4. The last page of the assignment should contain your signature.

Questions

1. (a) After you graduate, you have decided to accept a position working at Bureau
of Engineering research for Rs.10,00,000 per annum. The other offers you received
were for Rs.8,50,000, Rs. 9,50,000 and Rs. 9,00,000. What is the opportunity cost
of accepting the position at Bureau of Engineering research?

(b) You are deciding how many times to watch the movie PK. The total benefit that
you receive from seeing the movie is shown in the table below. Tickets to view each
show costs Rs. 100. How many times should you watch the movie, PK?

No. of times 1 2 3 4 5 6 7
Viewing movie
Total benefit 300 500 750 900 1000 1050 1080
(Rs.)

(c) Ayushi can prepare 15 drinks or grill 5 dinners per hour. Rita can prepare 10
drinks or grill 8 dinners per hour. Ayushi and Rita were to work in a bar and grille.
Who would prepare drinks, who would prepare the dinners and why? Explain with
the help of the relevant basic principles of economics.

2. Imagine a hypothetical economy where there is one firm, i.e., Modern Wheat and
one household. During 2017, Modern Wheat produces 1,11,250 kg wheat and sells
it at a price of Rs.20 per kg. To produce 1,11,250 kg of wheat during 2017, Modern
Wheat hired 20 labourers at the prevailing wage rate of Rs. 250 per day and
borrowed Rs. 40 lakh at an interest rate of 10% per annum.

(a) Represent the interrelationship between the consuming and producing

sector of the above hypothetical economy through circular flow diagram.
(b) What is the amount of financial flow flowing to producing sector during
2017?
(c) If Gross Domestic Product (GDP) of the hypothetical economy is defined
as the sum of payments made to all factors of production during a year,
estimate GDP for the hypothetical economy for 2017.