ECO 101 ASSIGNMENT 2

Instructions: Hand-written answers will be accepted only. You must turn in one file
only by the deadline.

1. Write the characteristics of the market structures discussed in class and give an
example of each.

2. Suppose you start a business of manufacturing computer software. Assume that this
computer software company is a perfectly competitive firm. Your fixed cost per month is
Tk. 100,000 and the total cost per month is TK. 300,000. If you sell 2000 software per
month and the average revenue is Tk. 200, what should be your a) short-run decision
regarding shutdown and b) long-run decision regarding exit?

3. a) On the x and y axes, draw the ATC, AVC, and MC curves and MR curves of a
perfectly competitive firm that is making a profit.
b) On the x and y axes, draw ATC, MC, MR, and a demand curve of a monopoly that is
making a profit.
Question of Final:

 Write the characteristics of the market structures discussed in class and give an
example of each.
 Suppose you start a business of manufacturing computer software. Assume that
this computer software company is a perfectly competitive firm. Your fixed cost
per month is Tk. 100,000 and total cost per month is TK. 300,000. If you sell 2000
software per month and the average revenue is Tk. 200, what should be your
a) short-run decision regarding shutdown and
b) long-run decision regarding exit?

 Suppose you start a business of manufacturing computer software. Assume that

this computer software company is a perfectly competitive firm. Your fixed cost
per month is Tk. 70,000 and the total cost is Tk. 150,000. If you sell 900 software
per month and the average revenue is Tk. 80, what should be your short-run
decision regarding shutdown and long-run decision regarding exit?
a) On the x and y axes, draw ATC, AVC, and MC curves and MR curves of a
perfectly competitive firm that is making a profit.
b) On the x and y axes, draw ATC, MC, MR, and a demand curve of a
monopoly that is making a profit.

 Suppose the following contains data of a monopoly

Output Price (Tk.) Total Cost (Tk.)

0 14 2
1 12 6
2 10 8
3 8 12
4 6 20
5 4 32

a. What is the profit-maximizing quantity of this firm?

b. What price does the above firm choose to sell its output?
NORTH SOUTH UNIVERSITY ECO 101 INTRODUCTION TO
MICROECONOMICS
SUMMER 2021 TIME: 1 Hour 10 Minutes
FINAL EXAMINATION TOTAL MARKS: 45
Instructions: Answer all 6 questions. Maximum 8 pages allowed. You must turn in 1
file only by the deadline. All answers need to be hand-written.

1. i) State the properties of indifference curves.

ii) Suppose a consumer spends his entire income on buying meat and vegetables. Show
graphically how the consumer’s optimum consumption choice changes if the price of
vegetables decreases labeling the income and substitution effects clearly.

2. The following table shows a firm’s input, output and costs in the short run. The price
of each unit of output is Tk. 30. (All costs and prices are in Tk.)
Labor Qty of Variable Total
Input Output cost cost
0 0 0 300
1 10 10 310
2 18 20 320
3 24 30 330
4 28 40 340
5 30 50 350
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a) What is the AFC of the firm when it employs 1 worker?

b) What is the MC of the 2nd worker?
c) What is the profit this firm makes when it employs 3 workers?
d) What is the MP of the 4th worker?

3. State the characteristics with an example of all the market structures discussed in class.

4. Suppose you start a business of manufacturing computer software. Assume that this
computer software company is a perfectly competitive firm. Your fixed cost per month
is Tk. 70,000 and total cost is Tk. 150,000. If you sell 900 software per month and the
average revenue is Tk. 80, what should be your short-run decision regarding shutdown
and long-run decision regarding exit?
5. Draw a monopolistic competitive firm a) making a profit in the short run b) zero profit
in the long run.

6. Suppose the following table contains data of a Monopoly.

Total Cost (Tk.)

0 14 2 ____________
1 12 6 ____________
2 10 8 ____________
3 8 12 ___________
4 6 20 ___________
5 4 32 ___________ Output Price (Tk.)

a. What is the profit-maximizing quantity of this firm?

b. What price does the above firm choose to sell its output?