Microeconomics Answers

(a) Define market failure and its causes. 

 (b) What is comparative theory of international trade explain. 

 (c) Define Economic Rent & show different situations of economic rent.

(a) Define market failure and its causes. 

 (b) What is comparative theory of international trade explain. 

 (c) Define Economic Rent & show different situations of economic rent.

(a) Define oligopoly & its features. Discuss the nature of kinked Demand Curve. 

 (b) Show game theory under oligopolistic market.

Explain the short run and longrun equilibrium under Monopolistic competition market & show 

excess capacity under monopolistic competition market.

Distinguish between Monopoly and Monoopolistic competition market & explain the social cost 

of monopoly.

The price p and the demand x for a product are related by the price demand equation x + 300p = 6000. Find the elasticity of demand E(p) interpret E(2)

Given the Utility Function is U = X

0.7Y

0.3 and Budget is taka 300. The original price was

(Px, Py) = (2, 2) and the new price is (Px’, Py) = (4, 2).

(a) Draw an angle curve for X by using the above information [Labelling is must]

(b) Calculate the value of Compensation variation (CV) and Equivalent variation (EV)? [10]

[ ordinary demand curve]

1. Let’s say there are two goods X and Y (respectively draw in x-axis and y-axis). Assume, X is

a normal good and Y in an inferior good. If price of X is increased, show the income and

substitution effect in the graph and explain.

2. Evaluate whether it violated or justify WARP conditionality: A consumer makes the

following choices (when you develop the matrix, show the calculation process for the first row)

a. At prices (p1,p2)=($4,$4) the choice was (x1,x2) = (20,4).

b. At (p1,p2)=($2,$2) the choice was (x1,x2) = (10,10).

c. At (p1,p2)=($2,$4) the choice was (x1,x2) = (10,8).

3. Given the Utility Function is U = X

0.7Y

0.3 and Budget is taka 300. The original price was

(Px, Py) = (2, 2) and the new price is (Px’, Py) = (4, 2).

(a) Draw an angle curve for X by using the above information [Labelling is must] [5]

(b) Calculate the value of Compensation variation (CV) and Equivalent variation (EV)? [10]

[Hint: Use the knowledge of chapter 5 and 6 to get the solutions for ordinary demand curve]

Let’s say there are two goods X and Y (respectively draw in x-axis and y-axis). Assume, X is

a normal good and Y in an inferior good. If price of X is reduced, show the income and

substitution effect in the graph and explain.