Description

SESSION	JULY-AUGUST 2024
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	I
COURSE CODE & NAME	DCM1102 ECONOMIC THEORY

 

 

Assignment Set – 1

 

1. Elaborate Micro and Macro Economics, with suitable example. Also discuss the methods of economics.

Ans 1.

Micro and Macro Economics

Economics is a social science that studies how individuals, organizations, and societies allocate scarce resources to fulfill unlimited wants and needs. It is broadly categorized into two primary branches: microeconomics and macroeconomics. Each branch focuses on different levels of economic activity and analysis.

Microeconomics
Microeconomics is the study of individual economic units, such as consumers, firms, and

 

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2. Define Cost. Throw light upon cost in short-run and long-run.

Ans 2.

Definition of Cost

Cost refers to the value of resources used in the production of goods and services. It represents the monetary or non-monetary expenditure required to produce a specific output. Costs can be explicit, involving direct monetary payments (e.g., wages and raw materials), or implicit, representing opportunity costs (e.g., foregone profits from alternative uses of resources).

For example, if a factory owner spends money on machinery and labor to produce a product, these expenditures are explicit costs. Meanwhile, the income the owner forgoes by not

 

 

3. Define demand. Discuss different types of elasticity of demand. 2+8

Ans 3.

Definition of Demand

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices over a specific period. It is not merely a desire for a product but is backed by the consumer’s purchasing power. Demand is influenced by factors such as price, income, consumer preferences, and the prices of related goods. For instance, the demand for apples increases when their price decreases, provided all other factors remain constant. This behavior is explained by the law of demand, which states that there is an inverse relationship

 

 

Assignment Set – 2

 

 

4. Elucidate interest with its different types. Explain the Fisher’s Time Preference Theory of interest.

Ans 4.

Definition of Interest

Interest is the cost of borrowing money or the return on investment for lending funds. It represents the compensation paid by the borrower to the lender for using the latter’s funds. In economic terms, interest is the price of capital, reflecting its value over time. For instance, a person borrowing 500 as interest for one year.

Types of Interest Interest can be categorized based on its nature and purpose.

1. Simple Interest Simple interest is calculated on the principal amount borrowed or invested over a specific period. It is determined using the formula:

 

5. Examine the main differences in between perfect and imperfect competition, as forms of market structures.

Ans 5.

Introduction to Market Structures

Market structures refer to the characteristics and organization of markets that influence the behavior of buyers and sellers, pricing mechanisms, and competition levels. Two broad categories of market structures are perfect competition and imperfect competition. These structures differ in terms of market dynamics, pricing, and profit-making capabilities.

Perfect Competition

Perfect competition is an idealized market structure where numerous buyers and sellers interact, and no single entity can influence the market price. It is characterized by:

• Large Number of Buyers and Sellers: Both buyers and sellers are so numerous that

 

 

6. Analyze the Marginal productivity Theory of Wage Determination.

Ans 6.

Introduction to Wage Determination

Wages are the payments made to labor for their contribution to the production process. Several theories explain wage determination, one of the most notable being the Marginal Productivity Theory. This theory links wages to the productivity of labor, emphasizing the value of an additional unit of labor in the production process.

Core Concept of Marginal Productivity Theory

The Marginal Productivity Theory of Wage Determination posits that wages are determined