Draw a diagram for a perfectly competitive industry with firms earning normal profits.

Please write out answers to any two of the following questions in around 400 words each. You must choose one from the Micro and one from the Macro section.

Microeconomics

1. Define and explain any one concept from Microeconomics and describe how you would apply it in a real-world business scenario
2. Draw a diagram for a perfectly competitive industry with firms earning normal profits. All firms in the industry use oil as a key input. Using your diagram, illustrate a reduction in the price of oil. Will firm-level profits increase or decrease and will market supply increase or decrease? Comment briefly on the possible impact of the recent oil price crash on businesses that use oil as an input.

Macroeconomics

3.Marginal Propensity to save in China is estimated to be extremely high, more than 30%, what might be the reasons for this?

4. In the context of the current coronavirus crisis and falling aggregate demand, what macroeconomic policies would you recommend to counter a recession?