Economics Questions: Revenue Calculation, Elasticity, and Equilibrium

This economics assignment provides solutions to questions related to revenue calculation, demand elasticity, and Nash equilibrium. It calculates total revenue based on adult and children's ticket demand at a given price, analyzes the elasticity of demand for adults versus children using graphical data and percentage change calculations, and applies the concept of Nash equilibrium with the prisoner's dilemma example. Furthermore, it includes revenue change analysis based on price adjustments for adult and child tickets and concludes with an elasticity of demand calculation to determine if a good is a luxury item based on income changes. Desklib offers a wealth of similar assignments and study tools for students.

Economics

Q1. A
Q2. D
Q3. C
Q4. B
Q5. A
Q6. A

Q7) Total Revenue = Price * Quantity
At 5 pounds, Adult demand is 50 and Children demand is 20.
Therefore, (5*50) + (5*20) = 250 + 100 = 350
So Total Revenue is Pound 350
Q8) By just looking at the graph it can be noticed that, the demand curve for adults are steeper than
children's demand curve. Therefore meaning that the demand for adults is more inelastic. This can
also be proven by looking at the percentage change in the quantity demanded by both the groups if
the price falls from Pound 5 to Pound 2. The rise in quantity demanded for children's market rises
more than the percentage change caused in the adult market.
Q9) Demand is considered inelastic if demand for a good or service remain unchanged even
when the price changes.
FORMULA = {(Q1 – Q2)/(Q1+ Q2 )} * {(P1 + P2)}/ (P1-P2)}
Q1= 50
Q2= 60
P1 =5
P2 = 2
{( 50-60)/(50+60 )} * {(5+2)/(5-2)} = - 0.21
Q10) If you observe the graph carefully it is given that, for a price of five pounds for adult’s
ticket, there would be a demand of 50 customers. If you change the price to eight pounds, there
would be a demand for 40 customers.
Initial Revenue = 5 * 50 = 250 pounds
New revenue = 8* 40 = 320 pounds
Change in revenue = 70 pounds
Therefore, it would lead to a profit of 70 pounds.
If you observe the graph carefully it is given that, for a price of five pounds for child’s ticket, there
would be a demand of 20 customers. If you change the price to three pounds, there would be a
demand for 40 customers.
Initial Revenue = 5 * 20 = 100 pounds
New revenue = 3* 40 = 120 pounds
Change in revenue = 20 pounds
Therefore, it would lead to a profit of 20 pounds.
The total of both the markets together is 90 Pounds.
Q11) Nash equilibrium is invented by John Nash who was American mathematician. This theorem
generally use in decision making approach inside game theory where participant accomplish the
desired result by not pervert from their initial strategy.
In the Nash equilibrium, every participants approach is top-rated whilst thinking about the choices
of various players. Every participant wins due to the fact every person receives the final results they
desire.
The prisoners' predicament is a not unusual place recreation idea instance and one which
appropriately showcases the impact of the Nash equilibrium.
The Nash equilibrium is regularly mentioned together with dominant approach, which states that the
selected approach of an actor will result in higher consequences out of all the feasible techniques

that may be used, irrespective of the approach that the opponent uses.
The Nash equilibrium does now no longer constantly suggest that the maximum top-rated approach
is chosen.
Q12) Elasticity of demand= change in percentage of quantity demanded/= change in
percentage of income
D1 = 16 KG
D0 = 8 KG
I 1 = 1500
I 0 = 1000
D1 – D0 / D1+ D0
I1-I0/I1+I0
= 16-8
16+8
1500-1000
1500+1000
=5/3
=1.66
It elastic in demand and the nature of good is luxury goods.