Scribd
Upload
118 views3 pages

Assignment 4 - Economic Analysis

This document is an assignment for an economics analysis course. It contains 5 questions related to economic concepts like price elasticity of demand, supply and demand curves, and equilibrium price and quantity. The questions analyze how price, quantity, income and other factors affect market equilibrium. Graphical analysis is required for some questions.

Uploaded by

badar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
118 views3 pages

Assignment 4 - Economic Analysis

This document is an assignment for an economics analysis course. It contains 5 questions related to economic concepts like price elasticity of demand, supply and demand curves, and equilibrium price and quantity. The questions analyze how price, quantity, income and other factors affect market equilibrium. Graphical analysis is required for some questions.

Uploaded by

badar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Quaid-i-Azam School of Management Sciences (QASMS)

Quaid-i-Azam University Islamabad


Assignment # 4
MSM-683 Economic Analysis
MBA
Time Allowed: 1 Week Total Marks: 50
Term: Fall 2020 Instructor: Dr. Ahsan Abbas

Q. 1 If the price per unit of X rises from Rs. 1.40 to Rs. 1.60, it is expected that monthly demand
will fall from 220,000 units to 200,000 units. What is the arc price elasticity of demand? Explain.

Q.2 Graphically explain the determination of equilibrium price and output under perfect
competition and monopoly in both the short-run and the long-run.

Q.3 Suppose you are the manager of a soft drink manufacturer. How would you expect the
following events to affect the price and quantity of your product and show graphically?

i. The price of comparable product decreases.

ii. New firms open in the vicinity

iii. The price of carbonated water increases

iv. The new technology has been discovered that reduces production costs

v. Energy prices and labor’s wages have been increased substantially.

Q.4 Suppose that the market for a certain commodity has the following demand and supply
schedules.

Demand Schedule

Price (Rs) Quantity Demanded


10 90
20 90
30 90
40 90
50 90
60 90
Supply Schedule

Price (Rs) Quantity Supplied


40 0
40 30
40 60
40 90
40 120

a) Draw the demand and supply curves. What is unusual about these curves?
b) What is the equilibrium (price and quantity) in this market?
c) Researchers tell you that the next time there will be a decrease in demand by 20 units
at each price level and there will be more sellers in the area. Due to this additional
supply there will be new supply schedule as follows.

Supply Schedule

Price (Rs) Quantity Supplied


40 10
40 40
40 70
40 100
40 130

d) What will be the new equilibrium (price and quantity)?

Q.5 Suppose that your demand schedule for compact discs is as follows.

Quantity Demanded Quantity Demanded


Price (Income = $10000) (Income = $12000)
$8 40 50
10 32 45
12 24 30
14 16 20
16 8 12

a) Calculate your price elasticity of demand as the price of compact discs increases from
$8 to $10 if (i) your income is $10000, and (ii) your income is $12000?

b) Calculate your income elasticity of demand as your income increases from $10000 to
$12000 if (i) the price is $12, and (ii) the price is $16?

You might also like