PRINCIPLES OF MICRO ECONOMICS SUPERVISION QUESTIONS

Submitted By Junaid Cheema

BBA 02123093 Zulaid Javed BBA
Dated : 17th October, 2012

Principles of Micro Economics Supervision Questions

Question No 1: 1. What is the impact of competition? Analyze

The impact of competition here is lowering of prices of solar cells by Chinese solar industry to destroy the U.S solar market. Chinese solar industry was subsidized by government and they lowered the prices of solar cells. They used unfair means of trade to destroy the market. Its against the international law of business. 2. What are U.S solar manufacturers accusing the Chinese government of doing? U.S solar manufacturers accused Chinese government of subsidizing their solar industry so that their solar industry can easily deteriorate the U.S solar market. 3. What was the response of U.S Commerce department to U.S solar industry against Chinese firms? U.S Commerce department increased import duty on Chinese solar Industry from 31 percent to 250 percent.

Question No 2: 1. Propose a plausible ranking of Andys preferences over the possible outcomes. Preferences I. Get into the house without damaging house

Andy wants to enter the house without damaging the house. He does not want any expense on fixing the damage. Thats why its foremost preference of Andy. II. Get into the house without injuring himself

Obviously he does not want to put himself in trouble by self injuring for opening the gate. But this is Andys second preference as he does not want to spend money. 2. What do economist want to say about the way that Andy might behave in the situation?

Lahore Business School, University Of Lahore

3. Do differences in their behavior imply that they have different preferences? Yes there are differences in their preferences as Andy does not want to spend more and save more. On the other hand Mike spends on necessities and get rid of problems

Question No 3: Explain briefly the following determinants of supply 1. Increase in the prices of inputs:

When there is increase in the prices of inputs, the per unit production goes on increasing that ultimately causes increase in selling price. Due to increase in selling price supply of the product is decreased. When a firm is producing hundred pieces of any commodity for hundred currency unit due to increase in prices of inputs less unit will be produced that results in decrease in supply. 2. Decrease in tax on the product: Decrease in tax on the product lower the production cost thus selling price decrease. Decrease in production cost increase the supply of product. 3. Technology Change: Technology changes make the production cost lesser. Decrease in production cost lowers the selling price and finally results in increase in supply of goods.

Lahore Business School, University Of Lahore