Assignment: Introduction To Micro-Economics

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assignment
ECO 101: Introduction to Micro-economics
Section 7
Spring 2013
North South University
Assignment 1
Full marks: 115
Time of Submission ( 24th February, 2013, deadline ends at 2:40 pm) Person to be submitted to :ME
Answer all the questions. The parenthesis carries the credit for each question 1. The crucial problem of economics is: (explain by choosing an option)(5) (a) Establishing a fair tax system.
(b) Providing social goods and services.
(c) Developing a price mechanism that reflects the relative scarcities of products and resources. (d) Allocating scarce productive resources to satisfy wants. (e) Enacting a set of laws that protects resources from overuse.

2. Define Opportunity Cost. How do you think it influences economic decisions? Explain with an example.(5) 3. How are decision made at the margin? Explain your answer with an appropriate example. (Use a diagram if necessary).(10) 4. What is the relationship between economic decision and scarcity? In how many ways does scarcity influence an economy?(10) 5. Inflation rate should be less than 4% per year in Bangladesh. State whether this is a positive or normative statement and explain briefly why.(2)

6. Child labor should be banned. State whether this is normative or a positive statement and why?(2)

7. The following diagrams show certain shifts in PPF. Explain why such shift might happen. ( We are considering butter on X axis and guns on Y axis) (2.5x2=5) a)[pic]

b) [pic]
8. Explain what happens two the PPF of a country producing guns (y) and butter (x)
(2.5x4=10)
a) A draught.
b) A war
c) Technological improvement in warfare.
d) Migration of labor from abroad.

9. What is any point inside the PPF represent? Why?(2)

10. The following table shows the production and consumption possibilities of two individuals Mr. Brad Pitt and Ms. Jennifer Anniston for loaves of Breads and bottles of Honey. From the situation also answer...
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