Final Term Examination Spring-2021

Name of Student Reg. No.

Subject: Microeconomics Program: BBA
Facilitator: Javaria Shaikh Max. Marks: 15
Date: Monday, May 31, 2021 Time: 03:00-06:00

Instructions:

 Attempt all the questions; use graphs where applicable to support your answer(s).
 Handwritten submissions converted into a file are equally acceptable as MS Word files.
 Graphs drawn using software are NOT ACCEPTABLE.
 In case of calculation, show all the calculations.
 Submissions through any other medium then Blackboard are NOT ACCEPTABLE.

Question 1 SHOW ALL THE CALCULATIONS AND Maximum Marks 08

GRAPH

In Pakistan internet service is ought to be considered as the perfectly competitive industry. Following is
the information available for the internet service provider A operating in the market.

Total Total
output Cost
0 180
10 280
20 400
30 530
40 670
50 820
60 980
70 1150

a. Briefly discuss the characteristics of the market Service Provider A is operating. 2 Marks
b. If the market price of the fruit is 16 6 Marks

i. Find how much output will the firm produce (Show calculations). 2 Marks
ii. Illustrate it graphically 2 Marks
iii. Find if the firm is maximizing profit or minimizing loss (show calculations) and highlight
the same in the graph drawn in part ii. 1 Mark
iv. From your answer in part iii, explain if the firm is operating in the LR or SR. 1 Mark

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 Question 2 Maximum Marks 07

Two major sellers Suzuki and Honda rule Pakistan’s automobile market as the oligopolistic market. They
jointly determine the price and output each firm would charge. However, if each firm constitutes its own
self-interest they can maximizes their profit. Either of the company can produce one car, while the values
in the matrix shows the profit for respective car. Use game theory to answer the questions.

Honda
Suzuki Accord City
Alto 15,000 30,000 70,000 90,000
Celerio 50,000 35,000 102,000 83,000

a. Explain the game theory between Honda and Suzuki in the given context. 2 Marks
b. If Suzuki wants to assemble Alto and Honda assembles City, how much profit will
Honda get? 1
Mark
c. If Honda wants to make Accord than Suzuki can make Alto or Celerio, which one is the
best choice? 2 Mark
d. With this perfect information, which car will respective company make and why?
2
Marks

*** GOOD LUCK ***

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