Microeconomics Assignment #1: Economic Analysis and Application

This microeconomics assignment delves into core economic principles, including opportunity cost, production possibility frontiers (PPF), and investment analysis. The assignment begins by defining microeconomics and its applications in understanding individual and organizational decision-making within the context of limited resources. It then explores the concept of the PPF, analyzing efficient and inefficient points, and the impact of technological advancements on production capabilities. The assignment further examines specialization and comparative advantage, calculating opportunity costs and determining optimal allocation of tasks. Finally, it addresses the time value of money, considering real required return and inflation to calculate investment returns. The assignment includes a bibliography of relevant sources.

Running head: MICROECONOMICS ASSIGNMENT
Microeconomics Assignment
Name of the Student:
Name of the University:
Author’s Note:

1MICROECONOMICS ASSIGNMENT
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................2
Question 3........................................................................................................................................3
Question 4........................................................................................................................................4
Bibliography....................................................................................................................................5

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Question 1
Microeconomics is the study that shows how individuals and various business organisations
make choices based on the limited set of resources that is available to us.
 Microeconomics helps in well describing the actual economic situation for suggesting
policies that in turn would be most successfully and bring out successful desired level of
result for predicting a range of outcomes for other policies and events.
 Application of Micro-Economics is well done for showing the welfare optimum of the
economic efficiency that is well achieved when there is a perfect competition in both the
factor and product market.
 Usage and Application of Micro-Economics is also done for the purpose of bringing out
welfare implication of Oligopoly whose key features is to analyse how other competitors
or seller would be reacting with the change in the price level of the product,
advertisement policy and the product range offered by the company.
Question 2
a) Production Possibility Frontier
0 500 1000 1500 2000 2500 3000 3500 4000
0
500
1000
1500
2000
Production Possibility Frontier

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b) The D combination can be well considered as an efficient point as the same well lies below
the PPC Curve that has been drawn.
c) Addition of Combination F in the PPC Curve
0 500 1000 1500 2000 2500 3000 3500 4000
0
200
400
600
800
1000
1200
1400
1600
1800
Production Possibility Frontier
d) Opportunity Cost of Bikes when we particularly move from B point to C point is around 100
Bikes. The table well shows that if we sacrifice around 100 units of bike hen we would be
getting 200 units of laptop.
e) If the country well invests into new technology for the purpose of producing laptops then the
PPC Curve would shift to right as development of technology says that laptops that the country
in turn can produce more quickly and efficiently.
Question 3
a) If the tasks allocated are well divided equally, then it would be taking around 11 hours for the
calculation part and around 15 hours of time in the writing portion. This in-turn brings a total
time period of 26 hours of time.

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b) If Diana in particular specializes for the calculation part and on the other hand if Gary
specializes in the preparation of slides than a total of 22 hours of time would be needed for the
completion of the project.
c) If Diana in particular specializes for the calculation part then he opportunity cost that will be
applicable will be around $60. Hence if Diana would be much better if she is paid any amount
that is less than $60 for doing the calculation part. It is important to note that since Gary’s
Opportunity Cost for doing the practical calculation part is around $50, he will be much better if
Diana will be paid any sum that will be lying $55-$60 for doing the practical calculation part.
Thus, in this case the total time spent would be around 20 hours of time period.
Question 4
In order to well determine the opportunity cost that is associated with the investment
done both the real required return along with the inflation rate should be well considered into
analysis portion. The real rate of required return from the market was around 4% and the
inflation rate is around 8% which makes the total nominal required rate of return to be about
12% (8%+4%). The amount of investment done was around $1,000 and the expected return that
could be well achieved with the help of investment done is as follows:
$1000*(1+12%): $1200
However, the amount that has been received by the investor is around $1100 which represents a
return of 11% and the investor in this case have suffered a loss of about 1%.

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Bibliography
Alikar, N., Mousavi, S. M., Ghazilla, R. A. R., Tavana, M., & Olugu, E. U. (2017). A bi-
objective multi-period series-parallel inventory-redundancy allocation problem with time
value of money and inflation considerations. Computers & Industrial Engineering, 104,
51-67.
Mert, M. (2018). Measuring economic growth using production possibility frontier under Harrod
neutrality. International Journal of Engineering Business Management, 10,
1847979018768416.
Muda, I., & Hasibuan, A. N. (2017). Public Discovery of the Concept of Time Value of Money
with Economic Value of Time. Proceedings of MICoMS, 251-257.
Yang, T. W., Na, J. H., & Ha, H. K. (2019). Comparative Analysis of Production Possibility
Frontier in Measuring Social Efficiency with Data Envelopment Analysis: An
Application to Airports. Sustainability, 11(7), 2181.