ECO162 MICROECONOMICS
JULY – NOV 2009
Instructions:
1. Form a group of 4 or 5 members.
2. On the cover of the assignment, please write:
a. Names and matrix no. of ALL group members.
b. Programme/part/group.
3. The assignment must be submitted NO LATER than 15th October 2009.
1. Explain how Socialism and Capitalism solve the three basic economic
problems.
2. Explain 4 differences between Islamic and conventional economic systems.
3. Explain the concept of scarcity, choice and opportunity cost.
4. Draw all diagrams (with labels) as stated below:
a. Chapter 1: The concave PPC with points showing efficient production,
inefficient production and scarcity problem.
b. Chapter 2: i) The consumer’s equilibrium.
ii) The changes in Qd and changes in Dd curve.
c. Chapter 3: Market equilibrium with a floor price.
d. Chapter 4: i) The production curves (TP, MP, AP) in one diagram.
ii) The cost curves (TC, TVC and TFC) in one diagram.
e. Chapter 5: i) Perfect Competition curve – the 3 short run profits and long run
profit.
ii) Monopoly curve – the 3 short run profits and long run profit.
iii) Oligopoly curve – the Sweezy’s model.
5. Write down the formula to calculate cross elasticity of demand. Explain the
importance of its coefficient.
6. Summarize the concept of the Law of Diminishing Marginal Return.
7. Explain 4 determinants of demand.
8. Explain 4 determinants of price elasticity of demand.
9. Using a diagram, explain and distinguish between elastic supply and inelastic
supply.
10. Discuss 4 characteristics of monopolistic competition.