Microeconomics Final Spring 2025 Question Paper

Faculty of Business and Entrepreneurship Semester: Spring-2025 Time: 120 minutes Examination: Final Full Marks: 40 Course Title: Microeconomics Course Code: 0311-212 Teachers' Initial: DSMR, SKH, MRI2 Answer all the following questions: 1. a. Illustrate why is price elasticity of demand important for business decision-making? Identify the factors determine whether a product is price elastic or inelastic? (CLO 2, Level 3) |71 b. Monica purchases 75 liters oil per month. But price of oil rises from $3 to $5 that reduces consumption to 25 liters. Calculate the price elasticity of demand for Monica for this price change and interpret your result? (CLO 2, Level 3) [3] 2. a. Distinguish between total utility and marginal utility. b. Explain the law of diminishing marginal utility with graph. (CLO 3, Level 4) [4] (CLO 3, Level 4) [6] 3. a. A popular coffee chain lowers its prices. Examine the impact will this likely have on the market demand and the response of competitors? (CLO 3, Level 4) [4] b. Analyze the consequences of excess supply (surplus) and excess demand (shortage) in the market? (CLO 3, Level 4) [6] 4. a. Compare and Contrast between perfect competition and monopoly market. (CLO 1, Level 2) [6] b. Explain why do firms in monopolistic competition spend more on advertising and product differentiation? (CLO 1, Level 2) [4]