Economics Study Material with Solved Assignments, Essays, Dissertations - Desklib

Economics

Question 11
Price Demand Supply New demand
3.00 60 30 30
3.25 55 40 15
3.50 50 50 0
3.75 45 60 -15
4.00 40 70 30
New equilibrium point = 3.75 Quantity is 60.
As, at price 3.75, Demand will increase to 60 (45 + 15) which is equivalent to supply of 60.
Question 12
Option (A)
The demand curve for coffee will shift from D1 to D2 as given in option A. The demand for
coffee may increase due to the change in the taste of the people which lead to increase in
demand even when the price was increasing. This factor has a huge influence over the
demand of the goods in the market.
Question 13
A)
PED for coffee
Initial Price (PI) = 3.5, New Price (PN) = 3.75,
Initial Quantity (QI) = 50, New Quantity (QN) = 45.
PED = ((QN − QI) / (QN + QI) / 2) / ( (PN - PI) / (PN + PI) / 2 )
PED = ((45 − 50) / (45 + 50) / 2) / ( (3.75 - 3.5) / (3.75 + 3.5) / 2)
PED = -0.0263 / 0.0172
PED = -1.5263
Since PED > 1 ⇒ demand is elastic.
B)
PES for coffee
Quantity calculation:
new – old * 100
(new + old) / 2
(60 – 50) *100