শুক্রবার, ৬ জানুয়ারী, ২০১২

Assignment-1 of Microeconomics in business


Assignment-1
Microeconomics in business
Duration: 4 days

  1. What is indifference curve? Describe the properties of indifference curve with graph and analysis.

  1. What does marginal rate of substitution (MRS) mean? Explain graphically.
  2. Marginal rate of substitution (MRS) between two goods is diminishing; explain
  3. Establish relationship between Marginal rate of substitution (MRS) and Marginal utility for two goods.

  1. What is meant by budget line of a consumer? Briefly explain the effect of price or income change on budget line graphically (hints: if price of X increases or decreases, if price of Y increases or decreases and if income increases or decreases).

  1. What is consumer equilibrium? Show the process of equilibrium of a consumer whose objective is to maximize the utility at a given budget. Show the relevant diagram.

  1. Explain the consumer’s equilibrium with the help of indifference curve.

  1. At a certain point of time, if a consumer’s income is tk.500, draw his budget line if he wants to purchase only two commodities X and Y where per unit X and Y can be purchased at tk.25 and tk.50 respectively. What will happen to the budget line if price of X decreased to tk.20?

  1. A consumer consumes two commodities X and Y. utility function of the consumer is-U=XY.Price of X is tk.10 per unit and price of Y tk.5 per unit. If consumer’s budget is tk.100, find out the equilibrium combination of X and Y while consumer’s level of satisfaction is given at 50 unit


  1. What is income effect and income consumption curve? Draw an income consumption curve considering two normal goods.
  2. What is price consumption curve (PCC)? How can we have the Marshallian demand curve from price consumption curve? Show graphically.

  1. Define the price effect and the income effect. Decompose the price effect into income effect and substitution effect through a diagram and derive the ordinary and new demand curve from the same graph.