PRINCIPLES OF MICROECONOMICS (HSS1021)

ASSIGNMENT – I
ND
2 SEMESTER B.TECH. (BRANCH: ALL) – APRIL-2023
DATE OF ASSIGNMENT GIVEN: - 25/04/2023
DATE & TIME OF ASSIGNMENT SUBMISSION: - As per the schedule attached

Q. No. Question CO PO Level*

1.a) You win $800 in a golf game. You have a choice between spending the money now or
putting it away for a year in a bank account that pays 10 percent interest. Find the opportunity CO1 PO6 L3
cost of spending the $800 now.
b) Madhuri runs a shop that sells knitted sweaters. Madhuri is a perfect competitor and can sell
each sweater for a price of Rs. 5000. The marginal cost of selling one sweater a day is
Rs.4000; the marginal cost of selling a second sweater is Rs.4500; and the marginal cost of
CO1 PO6 L4
selling a third sweater is Rs.5000, and the marginal cost of selling a fourth sweater is Rs.
5500. To maximize her profit, how much sweaters should Madhuri sell? Analyse the
situation, by using the basic principles of economics you have studied.
c) Governments can alter incentives and, hence, behaviour with public policy. Analyse how in
each situation people respond to the following public policies.
(i) To reduce the consumption of cigarettes, the government imposes a high tax on cigarettes. CO1 PO6 L4
(ii) To improve the living conditions of poor people, Government provides 25 kg of rice to each
family living below the poverty line at a subsidized price of Rs. 2 per kg.
2. Bangladesh, a small country, wants to produce two commodities, say hats and caps by
utilizing 1000 labour hours available with it. Various alternatives for the production of Hats
and Caps are given in the following table.
Production Alternatives A B C D E
Hats (No.) 0 150 250 375 500
Caps (No.) 100 70 50 25 0
a) Utilising the information given in the above table, draw a production possibilities frontier
(PPF). Compute the opportunity cost per unit of production of the hat at each possibility CO1 PO6 L3
given in the above table.
b) Analyze whether you find any relationship between the opportunity costs per unit you derive
CO1 PO6 L4
and the production possibilities curve drawn at (a) above. If yes, justify your answer.
c) Assume that the available resources, i.e., labour increases from 1000 labour hours to 2000
CO1 PO6 L4
labour hours. Analyse this situation with the help of the production possibility frontier.
*Blooms Taxonomy Level: L1: Remembering; L2: Understanding; L3: Applying; L4: Analyzing; L5: Evaluating;
L6: Creating
N.B.:-
1. The assignment answer preferably is written on both sides of A4 size (Xerox) paper, but not in a notebook.
2. The top of the first page of the assignment answer sheet must cover Name, Regd. No., Branch, and Section.
3. Assignment answers must be handwritten.
4. During any emergency, students are advised to submit the assignment in Faculty Chamber E-417, on or before the due
date.
5. Students are directed not to drop the assignment answer sheet in the faculty room if the door is locked/closed.

(STUDENTS ARE ADVISED TO KEEP A SET OF PHOTOCOPIES OF THE ASSIGNMENT ANSWER BEFORE
SUBMISSION, FOR FUTURE REFERENCE)

DATE & TIME OF ASSIGNMENT SUBMISSION

Sem Branch SEC Date (Day) of Assignment submission Time of submission
2nd CSE 2241007 27/04/2023 (THU)
2nd CSE 2241008 27/04/2023 (THU)
2nd CSE 2241006 28/04/2023 (FRI) In PME Class
2nd CSIT 2241020 29/04/2023 (SAT)
2nd CSE 2241045 01/05/2023 (MON)

USE BOTH SIDES OF THE PAPER FOR WRITING