BBA/B.Com Micro Economics JUNE 2026

Description

Micro Economics

Jun 2026 Examination

 

 

Q1. A premium coffee brand operating in Bangalore has recently observed several changes in the market environment. Salaries of IT professionals in the city have increased significantly, increasing their disposable income. At the same time, the price of tea, which is a close substitute for coffee, has risen. Additionally, the price of coffee machines, a complementary good, has fallen, making it more affordable for consumers to prepare coffee at home. However, doctors have released a report cautioning consumers against excessive caffeine consumption, which may negatively influence consumer preferences. Applying your knowledge of demand determinants, identify which of the above factors will lead to an increase in demand and which will lead to a decrease in demand for coffee. Clearly explain the direction of shift in the demand curve caused by each factor. Based on your analysis, determine the likely net effect on the demand curve for coffee and justify your reasoning. (10 Marks)

Ans 1.

Introduction

The Law of Demand explains the inverse relationship between price and quantity demanded while holding all other factors constant. However, in practice, demand is influenced by multiple non-price factors simultaneously. When any of these determinants change, the entire demand curve shifts rather than moving along it. For the premium coffee brand in Bangalore, four distinct demand determinants have changed at the same time, and each pulls the demand curve in a specific direction. Analyzing each factor individually and then determining the net effect requires a systematic application of demand

 

Fully solved you can download

ASSIGNMENTS JUNE 2026

 

• Fully Solved, High Quality
• Lowest Price Guarantee: Just ₹199 per Assignment!
• 100% Original & Manually Solved (No AI/ChatGPT!)

Hurry! Last Date: 27 April 2026

• Order Now: com/online-buy-2/

Quick Response Guaranteed!

For Unique Assignment please contact on

• WhatsApp: 8791490301
• [email protected]
• aapkieducation.com

 

 

 

Q2 (A). Scenario 1: A famous painter announces that he will retire after completing only 10 more paintings. After this announcement, the price of his paintings increases sharply due to high demand from collectors. However, the number of paintings available in the market does not increase. Scenario 2: At the same time, farmers expect that the price of onions will rise further in the coming months. Even though current prices are high, many farmers reduce the quantity supplied in the market and store their stock. Analyse the above situations and explain why they represent exceptions to the Law of Supply. Identify the economic reasons behind the behaviour of producers in each case. (5 Marks)

Ans 2(A).

Introduction

The Law of Supply states that when the price of a good rises, the quantity supplied by producers also rises, assuming all other factors remain constant. Both scenarios presented here violate this fundamental relationship, making them genuine exceptions to the Law of Supply. Understanding why these exceptions occur reveals important economic realities about how producers actually behave in specific market

 

Q2 (B). A leading smartphone company increases the price of its premium model by 15%. After the price increase, some consumers switch to other brands, some delay their purchase, some continue buying due to strong brand loyalty, and others buy urgently despite the higher price. The phone is expensive and forms a significant portion of a middle-class consumer’s income. Analyse any four determinants of price elasticity of demand reflected in the above situation with suitable economic reasoning. (5 Marks)

Ans 2(B).

Introduction

Price elasticity of demand measures how sensitive consumer demand is to a change in price. When a smartphone company increases price by 15 percent, the varied consumer responses described in this scenario reflect different elasticity-influencing factors operating simultaneously across the buyer population. Analyzing these responses reveals four distinct determinants at work.

Concept and