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Last Date for Submission of Assignment: - 22/Sep/2018
1. Answer all the questions.
2. Top of the Assignment must contain Branch, Section, Regd. No. & Name of the student, clearly.
3. Submit the assignment in A4 size paper, preferably to be written on both the sides, hand written
(stapled only).
4. The last page of the assignment should contain your signature.


1. (a) After you graduate, you have decided to accept a position working at Bureau of
Engineering research for Rs.10,00,000 per annum. The other offers you received were for
Rs.8,50,000, Rs. 9,50,000 and Rs. 9,00,000. What is the opportunity cost of accepting the
position at Bureau of Engineering research?

(b) You are deciding how many times to watch the movie PK. The total benefit that you receive
from seeing the movie is shown in the table below. Tickets to view each show costs Rs. 100.
How many times should you watch the movie, PK?

No. of times 1 2 3 4 5 6 7
Viewing movie
Total benefit 300 500 750 900 1000 1050 1080

(c) Ayushi can prepare 15 drinks or grill 5 dinners per hour. Rita can prepare 10 drinks or grill 8
dinners per hour. Ayushi and Rita were to work in a bar and grille. Who would prepare drinks,
who would prepare the dinners and why? Explain with the help of the relevant basic principles of

2. Imagine a hypothetical economy where there is one firm, i.e., Modern Wheat and one
household. During 2017, Modern Wheat produces 1,11,250 kg wheat and sells it at a price of
Rs.20 per kg. To produce 1,11,250 kg of wheat during 2017, Modern Wheat hired 20 labourers
at the prevailing wage rate of Rs. 250 per day and borrowed Rs. 40 lakh at an interest rate of
10% per annum.

(a) Represent the interrelationship between the consuming and producing sector of the
above hypothetical economy through circular flow diagram.
(b) What is the amount of financial flow flowing to producing sector during 2017?
(c) If Gross Domestic Product (GDP) of the hypothetical economy is defined as the sum
of payments made to all factors of production during a year, estimate GDP for the
hypothetical economy for 2017.