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NMIMS
Global Access
School
for Continuing Education (NGA-SCE)
Course: Business Economics
Internal
Assignment Applicable for December 2015 Examination
Assignment
Marks: 30
Q1. There
is a fruit seller who has 30 kgs of apples to be sold and he wants to fix a
price so that all the apples are sold. There are three customers in the market
and their individual demand functions are given below:
D1=25-.05P
D2=20-.025P
D3=15-.075P
Where D is
the demand and P is the price
Determine
:
a) Market
demand equation for the fruit seller (2.5 marks)
Answer : (a) Market demand equation:
D1 = 25 – 0.05p ………………………………… 1
D2 = 20 – 0.25P ………………………………… 2
D3 = 15 –
0.75P ………………………………. 3
b) Price at
which he can sell all the apples
(2.5 marks)
Answer : According
to equilibrium price,
D = S
60
+ 1.5P = 30
60
+ 1.5p +50p = 30 + 50p
60
+ 51.5p = 30 + 50p1.
60 + 51.5p +100 = 30 +50p
+100
c) Individual demands of each of the three
customers (5 marks)
Answer :
Individual demand at this price :
D1
= 25 – 0.05x 20
= 25 – 1
Q2. a)
Determine the market equilibrium price if the demand and supply function
is given as:
D = 12p + 8
S = 14p –
4
(5 marks)
Where D=
demand
S=supply
p= price
Answer : (a)
At Equilibrium market price, Qd = Qs
Hence D=S
b) Determine the equilibrium quantity if price
is the same as above
D = 4p –
4q
S = 8q –
4p
(5 marks)
Where D=
demand
S=supply
p= price
q= quantity
Answer :
where D = 4p- 4q
S = 8q – 4p
By putting the value of equilibrium price in above equations, we get
D =4(6) -4q
3. a)
Suppose the monthly income of an individual increases from Rs 20,000 to Rs
25,000 which increases his demand for clothes from 40 units to 60 units.
Calculate the income
elasticity
of demand. (5 marks)
Answer: Income Elasticity Of Demand =%
change in quantity demanded
% change in income
b)
Quantity demanded for tea has increased from 300 to 400 units with an increase
in the
price of
the coffee powder from Rs 25 to Rs 35. Calculate the cross elasticity of demand
between
tea and coffee. (5 marks)
Answer :
If quantity demanded of product tea is increases with the increase in price of
coffee powder, there is cross elasticity of demand.
Dear
students get fully solved assignments
Send
your semester & Specialization name to our mail id :
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