INFORMATION AND COMMUNICATIONS UNIVERSITY

INTRODUCTION TO MICROECONOMICS: ASSIGNMENT I

Lecturer: Beda Mwale, MSc. Eco.,MSc.PM.,MBA Fin.,BSc.Eco., PGD

M&E.,PGD.PM.,PGD.Inter.PM.,CAE.
Mobile: +260977475413
Email: mwalebeda@gmail.com

Unit 1: The subject matter of Economics

Question 1

(a) Explain the statement “Economics is a social science.”

(b) Why is the study of Economics important?
(c) Compare and contrast macroeconomics and microeconomics
(d) How are Economic models and theories developed? What is their function?

Unit 2: The Economic problem Question 2

(a) What are Economic resources?

(b) Explain the meaning of (1) land, (2) Capital (3) Labour (4) Entrepreneurship as used in
economics
(c) What is meant by the Law of diminishing returns?
(d) How much the concept of diminishing returns be applied in the following cases:
(i) Motor car production
(ii) Wheat production
(iii) Listening to lectures
(e) How does the market system answer the key economic questions relating to the problem
of the allocation of scarce resources?

Unit 3: Supply and demand

Question 3

(a) Compare and contrast a „change in supply‟ and a „change in the quantity supplied‟
(b) Zim police warns dubious traders.
Harare – “the Zimbabwean police warned last Tuesday the unscrupulous traders selling
commodities at above the government stipulated prices that they risked being arrested
and charged if caught doing the unlawful act.
 Police spokesperson inspector, Victor Vingwe, Said that “police would not hesitate to
arrest and charge any retailer caught flouting the gazetted price.
The warning comes in the wake of unjustified price increases of mealie meal in the past
two weeks by millers without the approval of the government.
You are required to:
Explain, with the aid of a diagram, the effect of this form of government intervention on
the price mechanism

Unit 3: Elasticity of demand and supply

Question 4

(a) Define price elasticity of demand and distinguish its various types. How would you measure
it?
(b) Define and explain price and cross elasticity‟s of demand.
(c) Explain how the price of elasticity of demand is related to the total revenue of the firm.
(d) Explain why a firm facing a negatively sloped demand curve would not produce in the
inelastic position of the demand in its role in business decision?
(e) Given the demand function: Q = 10 -2P
(i) Prepare a total scheduler and draw the demand curves;
(ii) Derive the total and marginal revenue schedules
(iii) Calculate the elasticity for the degrees in price from 300 kwacha to 200 kwacha

Question 5

(a) How far is profit maximization the basic objective of the firm? What are the reasons for
limiting the profit?
(b) Define business organization and discuss its many types in brief.
(c) Distinguish between public sector and private sector enterprises.
(d) A monopolist firm faces an inverse demand curve as P = 72 – 3Q and produces at a
constant cost of K18.00.
(i) How much would the monopolist produce and charge if you were to fix one price
for all consumers?
(ii) How much would he produce if he were to charge a different price for each
consumer? Would this result in higher social welfare? Why or why not?

Question 6

(a) Suppose that the market demand function for a two-firm equal market sharing cartel is
Q = 120 – 10P and that the total cost function of each duopolist is TC‟ = 0.1Q2.
Determine, using calculus, the best level of output of each duopolist, the price at which
each will sell the commodity, and the total profits of each.
 (b) Define monopolistic competition and give a few examples of it. Identify the competitive
and monopolistic elements in monopolistic competition. Why is it pretty difficulty or
hardly possible to define the market demand curve, the market supply curve, and the
equilibrium price under monopolistic competition?

Due Date: 15th October, 2022

INTRODUCTION TO MICROECONOMICS: ASSIGNMENT II

Lecturer: Beda Mwale, MSc. Eco.,MSc.PM.,MBA Fin.,BSc.Eco., PGD

M&E.,PGD.PM.,PGD.Inter.PM.,CAE.
Mobile: +260977475413
Email: mwalebeda@gmail.com

Unit 1: Demand and Supply: Subject Matter of Economics

Question 1

(a) Explain what you understand by

(a) Demand and Supply
(b) Demand and supply curves
(c) Utility theory
(d) Demand and supply schedules
(e) Maximum price and minimum price

Question 2

(a) Illustrating graphically and specifying the assumptions upon which your reasoning is
best,:
(i) The effect on the price and output of fresh maize of adverse weather
conditions.
(ii) The effects of on the price and output of oranges of an increase in
consumer‟s income.
(iii) Explain why farmers in Zambia refused to accept the price of a 50 Kg bag
of maize set up by the Food Reserve Agency this year.
Question 3

(a) Explain with appropriate graphs what you understand by

(i) Price elasticity demand
(ii) Price elasticity of supply
(iii) Elastic demand
(iv) Inelastic demand
(v) Unitary elasticity of demand
(vi) Income elasticity of demand
(vii) Cross elasticity of demand
(b) The price of product was K4, 000 and the annual demand was 2000 units when
the price of the commodity was reduced to K3, 000, the annual demand increased to 4000
units. Calculate the price elasticity of demand for the price changes given.
(c) What are the determinants of demand and supply?
(d) What are the factors affecting income elasticity demand? Explain the practical
uses of income elasticity demand
Question 5

(a) Distinguish between public company, private company, sole trader and
partnership.
(b) If we have the following demand and supply function:
Qd = 100 – 10P
Qs = 40 + 20P Calculate the
equilibrium price.

(c) You are given a market demand curve for sweet potatoes at Soweto market.
Assume that the price of sweet potatoes increase by 20% at each price, due, say, to
substantial increases in the prices of other substitute products. Plot the demand curves for
sweet potatoes. Is the new curve parallel to the old one?

PRODUCTION COURSE AND MARKET STRUCTURES

Question 6

(a) Explain, using graphs, what do you understand by:

(i) Fixed cost
(ii) Variable cost
(iii) Total cost
(iv) Total fixed cost
(v) Marginal cost
(vi) Short and long-run costs
(b) What is the relationship between production and cost?
 (c) Compare and contrast monopoly, perfect competition, monopolistic competition
and oligopoly.
(d) If a monopolist is the only firm in the market, can it charge any commodity price
it wants?
(e) Why would any firm enter a profitable industry knowing that profits would
eventually be eliminated by competition?

Due Date: 15th October, 2022