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Here are the solutions for economics mid-term paper:

Situation 1:

Many star hotels routinely offer unlimited buffet meals.

Economic concept: Diminishing Marginal Utility

The more of a good that one obtains in a specific period of time, the less the additional utility derived from an additional unit of the good.

Justification:

In unlimited buffet meals the star hotels offer unlimited food in some time period, but every additional food item consumed the satisfaction derived is decreased.

Example:

In my engineering 3^rd year I visited The Black Pearl restaurant (unlimited buffet offered)

Situation 2:

Theatre artistes/performers performing in multiple cities/events.

Economic concept: Mobility of Inputs(Supply)

The ease which inputs can be relocated from one place to another.

Justification: Theatre artistes are mobile in nature which means can move from one place to another to showcase their performance.

Example: My cousin performs Arangetram (classical dance) in theatres in different locations(Bengaluru, Chennai, and more ) in India.

Situation 3:

Three prospective locations for a large retail outlet-location ‘A’ offers 750 net benefit units, location ‘B’ offers 900 net benefit units and location ‘C’ offers 850 net benefit units.

Economic Concept: Opportunity cost

The cost of something is what you give up to get it.

Justification: Retailer would select location ‘B’ because it has got Marginal benefit of 150 as compared to location ‘A’ and 50 as compared to location ‘C’.

Example: In 1995, my father wanted to start business (hotel) he had to choose between location ‘A’ (Bangalore road) and location ‘B’ (Parvathi nagar) in my native (Bellary). Finally, he chooses location ‘A’ because of more benefits and marginal net benefit from it.

Situation 4:

Increased usage of combination of skilled labour and technology is believed to result in increased output in manufacturing industries.

Economic concept: Increasing returns to scale

Output increases more than proportionately with an increases in the inputs increasing returns to scale.

Justification: When the qualitative inputs are increased like skilled labour and new technology, the outputs increases more than proportionally with inputs.

Example: Textile Industry in India can be Increasing returns to scale if the skilled labour is increased with better new technology.

Situation 5:

We often see keen interest especially among young men and women to participate in fashion shows.

Economic concept: People respond to Incentives

An incentive is something that induces a person to act.

Justification: In fashion show Industry young men and women respond to incentives like popularity, money, luxuries, remuneration.

Example: My junior from engineering college has completed her graduation but now she wants to go into fashion technology because she is more attracted to the popularity and income gains from it.