ECO401 - Economics

Please share gdb solution and discussion

Requirement No.1 Calculate the market equilibrium level of price and quantity for a housing unit. Qd = 25000- 2P Qs = 10000 + 1P SOLUTION: As we know that: Qs= Qd 10000+1P= 25000- 2P 1P+ 2P= 25000-10000 3P= 15000 P= 15000/3 P= 5000 Putting the value of P Qd= 25000- 2(5000) Qd= 25000-10000 Qd= 15000 Qs= 10000+1P Qs= 10000+1(5000) Qs= 15000 Hence equilibrium of P= 5000 is Qs= Qd =15000 Requirement No.2: Calculate price elasticity of demand using point elasticity method when the construction industry is in equilibrium and interpret the result. Point elasticity= dQd/dp*P/Q Qd=25000- 2P dQd/dP= 0-2(1) dQd/dP=-2 Point of elasticity=-2 *5000/15000 =(-2)/3 Point of elasticity=-0.6666…… Requirement No.3: What kind of price rationing strategy should be implemented by government to provide renters with houses at affordable price? Also mention the impact of this strategy on equilibrium quantity demanded and equilibrium quantity supplied of houses SOLUTION For the given case we have followed the” Price floor Stretegy”Because this is a supporting strategy: Effect on supply Effect on equilibrium price Effect on equilibrium Quantity demand Increase supply Decrease price Increase demand

THE CASE: Pakistan is the 5th most populous country in the world, with 220 million citizens. Out of total population, 36.38% lives in urban areas whereas 63.62% resides in rural areas. There is a huge demand for houses due to a 2.4% annual population growth rate as per census 2017. Further, Pakistan’s construction industry is suffering from a severe shortage of housing facilities, particularly for low and middle-income groups. Suppose the quantity demanded and quantity supplied functions for houses are given below: Qd = 25000- 2P Qs = 10000 + 1P Where ‘P’ is the price in rupees of a housing unit, ‘Qd’ is quantity demanded for housing units. ‘Qs’ is quantity supplied for housing units. Requirement No.1: Calculate the market equilibrium level of price and quantity for a housing unit. Requirement No.2: Calculate price elasticity of demand using point elasticity method when the construction industry is in equilibrium and interpret the result. Now consider if government decides to cater this increasing demand of houses and wishes to intervene in rental market to provide renters with affordable houses. Requirement No.3: What kind of price rationing strategy should be implemented by government to provide renters with houses at affordable price? Also mention the impact of this strategy on equilibrium quantity demanded and equilibrium quantity supplied of houses? please help me solve this assignment. you can also gives hints or explain about it i will solve of my own.

Re: ECO401 Assignment 1 Solution and Discussion

SEMESTER FALL 2019 ECONOMICS (ECO401) ASSIGNMENT DUE DATE: JANUARY 21, 2020 MARKS: 15 ASSIGNMENT: Apple is an American international Tech brand that designs, manufactures, and deals in hardware devices and software. It includes number of hardware products like iPad tablet computer, smart speaker, the Apple Watch but iPhone smartphone is highly demanded product around the globe. Apple has autonomy in production and price setting of its products. Apple is famous for its scope of variety in quality products and earning high revenues. Suppose total revenue (TR) and total cost (TC) functions of Apple are following. TR = 100Q – 1.5Q2 TC = 30 + 15Q Requirements: a. CalculateprofitmaximizingoutputlevelofAppleusingmarginalrevenue(MR) and marginal cost (MC) approach. b. Find out the amount of profit earned by Apple at profit maximizing level of output calculated in part a. c. Find out average revenue (AR) function and slope of average revenue (AR) function. (Marks: Part a:5, Part b: 5, Part c: 2.5+2.5) IMPORTANT: 24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience. OTHER IMPORTANT INSTRUCTIONS: DEADLINE: • Make sure to upload the solution file before the due date on VULMS. • Any submission made via email after the due date will not be accepted. FORMATTING GUIDELINES: • Use the font style “Times New Roman” or “Arial” and font size “12”. • It is advised to compose your document in MS-Word format. • You may also compose your assignment in Open Office format. • Use black and blue font colors only. RULES FOR MARKING Please note that your assignment will not be graded or graded as Zero (0), if: • It is submitted after the due date. • The file you uploaded does not open or is corrupt. • It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc. • It is cheated or copied from other students, internet, books, journals etc. Note related to load shedding: Please be proactive Dear students! As you know that Post Mid-Term semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

Total Marks 5 Starting Date Friday, November 15, 2019 Closing Date Thursday, November 21, 2019 Status Open Question Title Government’s Role in Price Determination & Equilibrium Analysis Question Description CASE: Governments get involved in agricultural output markets to stabilize prices of agricultural goods so that producers get reasonable prices. Pakistan’s agriculture sector recorded a slow growth rate of 0.85 percent during the last fiscal year (2018-19). It’s very important to enhance agricultural production to increase farmers’ income, imports reduction and to expand export base of the country. The National Agriculture Emergency Program plans to spend Rs.290 billion in the next five years to boost the sector. The program will be implemented with the coordination of all provinces to improve productivity of major crops i.e. wheat, sugarcane, cotton, rice etc. Requirement: Being student of economics identify appropriate price policy measure which government can opt to motivate the farmers and increase agricultural productivity. Logically discuss how the identified price policy will boost the agricultural production.

Quiz 3 Total Questions : 10 Please read the following instructions carefully! Quiz will be based upon Multiple Choice Questions (MCQs). You have to attempt the quiz online. You can start attempting the quiz any time within given date(s) of a particular subject by clicking the link for Quiz in VULMS. Each question has a fixed time of 90 seconds. So you have to save your answer before 90 seconds. But due to unstable internet speeds, it is recommended that you should save your answer within 60 seconds. While attempting a question, keep an eye on the remaining time. Attempting quiz is unidirectional. Once you move forward to the next question, you can not go back to the previous one. Therefore before moving to the next question, make sure that you have selected the best option. DO NOT press Back Button / Backspace Button while attempting a question, otherwise you will lose that question. DO NOT refresh the page unnecessarily, specially when following messages appear Saving… Question Timeout: Now loading next question… Javascript MUST be enabled in your browser; otherwise you will not be able to attempt the quiz. If for any reason, you lose access to internet (like power failure or disconnection of internet), you will be able to attempt the quiz again from the question next to the last shown question. But remember that you have to complete the quiz before expiry of the deadline. If any student failed to attempt the quiz in given time then no re-take or offline quiz will be held. Start Quiz