ECO402 - Microeconomics

Re: ECO402 Assignment 1 Solution and Discussion SEMESTER FALL 2020 MICROECONOMICS (ECO402) ASSIGNMENT # 01 DUE DATE: 10 TH DECEMBER, 2020 MARKS: 15 The Case: Breakfast is often called ‘the most important meal of the day’. As the name suggests, breakfast breaks the overnight fasting period. It replenishes your supply of glucose to boost your energy levels and alertness. It also helps to provide other essential nutrients required for good health. Breakfast can help to better weight management, reduce risk of type 2 diabetes, and heart disease in the long term. Milk, eggs, and tea are commonly used in breakfast in Pakistan. Therefore, changes in the prices of these products have a major impact on the cost of living. The information about their nominal prices and CPI from 2018 to 2020 is giver below: Item Unit Year Nominal Price CPI Milk Liter Jun -2018 85.00 283.97 Jun -2019 90.00 296.50 Jun -2020 97.50 322.10 Eggs Dozen Jun -2018 83.13 182.83 Jun -2019 79.38 172.61 Jun -2020 115.63 229.01 Tea Packet Jun -2018 205.26 304.69 Jun -2019 221.05 322.11 Jun -2020 242.10 350.92 Requirements: Keeping in mind the above scenario, solve the following questions. a. By assuming June-2018 as the base year, find the real price of milk, eggs, and tea in each year. b. If the base year bundle has 10 liter milk, 3 dozen eggs, and 2 packets of tea then find the Laspeyres index by assuming June-2018 as the base year and June-2020 as the current year. Marks: (9+6)

Re: ECO402 Assignment 1 Solution and Discussion SEMESTER SPRING 2020 MICROECONOMICS (ECO402) ASSIGNMENT DUE DATE: JUNE 01, 2020 MARKS: 10 Case#01: Pakistan electricity sector is a developing market. For years, the matter of balancing the country’s supply against the demand for electricity had remained an unresolved matter. According to Pakistan Economic Survey 2018-19, the installed electricity generation capacity reached 34,282 megawatts (MW) in Jul- Mar 2018-19 compared to 33,433 megawatts (MW) in the corresponding period of previous year, recording a 2.5% growth. Despite the fact that Pakistan’s installed capacity to generate electricity has surged up, this sector is still facing manifold issues. Let’s suppose the quantity demanded and quantity supplied at different prices per unit of electricity are given in the following table: Per unit Price (Rupees) Quantity Demanded (Thousand MV) Quantity Supplied (Thousand MV) 20 25 14 24 22 16 26 18 18 28 16 20 Requirements: Keeping in mind the above table, you are required to: A. Identify the per unit equilibrium price of electricity. B. Calculate the price elasticity of demand and price elasticity of supply when per unit price of electricity is rupees 24. Marks: (1+6) Case#02: Meat is a consumable food that appears in various forms in Pakistanlivestock markets including beef, mutton and poultry. Pakistan livestock sector has 50% share in agricultural GDP. Meat and poultry are great sources of protein. They also provide lots of other nutrients like iodine, iron, zinc, vitamins (especially B12), and essential fatty acids. The high cost of a nutritious diet can worsen nutrition outcomes, especially for low-income households. Consumer Price Index (CPI) is used to assess the situation of Inflation. The monthly price review shows the prices of 53 items, including beef, mutton and chicken in 17 major cities of Pakistan. The information about nominal prices and CPI of beef, mutton and chicken for the year 2019 and year 2020 is given below: Item Unit Year Nominal Price in Faisalabad CPI Real Price Beef Kg April- 2019 375.00 336.48 April- 2020 450.00 372.48 ? Mutton Kg April- 2019 950.00 350.53 April- 2020 1000.00 380.63 ? Chicken,live Kg April- 2019 179.88 225.63 April- 2020 128.00 168.32 ? Requirements: Keeping in mind the above case and assuming April-2019 as the base year, find the real price of beef, mutton and chicken for April-2020. Marks: (1+1+1) 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. 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 marked, 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 Pre 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 Monday, January 20, 2020 Closing Date Tuesday, January 28, 2020 Status Open Question Title The impact of tax Question Description The Case: Poisonous smog has become a 5th season in Pakistan. The quality of air turned so bad that Government of Punjab decided to close the schools in three big cities (Lahore, Faisalabad, Gujranwala). A major factor behind the hazardous air quality is the combustion of fossil fuel. The unregulated use of fossil fuel (vehicles, industrial use), emits lethal particles such as PM2.5 that penetrate our lungs and bloodstream; and responsible for many diseases like asthma, pulmonary diseases, and heart attacks. The use of fossil fuel is required for economic growth but unregulated combustion extracts an enormous social cost in the shape of society’s poor health. Carbon taxes have been efficient in bringing down CO2 emissions. In Sweden, the implementation of carbon tax showed 25% reduction in the level of emission with 60% increase in their GDP. Requirement: Keeping in view the above scenario, logically discuss the impact of the implementation of carbon tax on the consumers and producers.

SEMESTER FALL 2019 MICROECONOMICS (ECO402) ASSIGNMENT DUE DATE: 27TH NOVEMBER, 2019 MARKS: 15 The Case: The high cost of a nutritious diet can worsen nutrition outcomes, especially in low-income households. Vegetables are an important part of human diet due to the provision of vitamins, minerals, proteins, and carbohydrates. In Pakistan, Consumer Price Index (CPI) is used to reveal the level of Inflation. The monthly price review shows the prices of 53 items in 18 major cities of Pakistan. At present, the increase in the price of vegetables has affected the domestic budget. Tomatoes, onions, and vegetable ghee are inevitable food ingredient in the cooking. The information about their nominal prices in Faisalabad and CPI from year 2017 to year 2019 is giver below: Items Unit Tomato kg Onion kg Vegetable Ghee Year Oct -2017 Oct -2018 Oct -2019 Oct -2017 Oct -2018 Oct -2019 Oct -2017 Oct -2018 Oct -2019 Nominal Price in Faisalabad 113.75 73.13 92.00 81.88 36.88 78.00 135.88 144.63 178.85 CPI Real Price 337.71 ? 240.62 ? 210.34 ? 491.92 ? 216.58 ? 464.37 ? 143.26 ? 148.48 ? 173.41 ? kg Data Source: Monthly review on price indices. Statistics Division, Government of Pakistan Requirements: Keeping in mind the above scenario, solve the following questions. a. By assuming Oct-2017 as base year, find real price of tomato, onion and vegetable ghee in each year. b. If base year bundle have 5 kg tomato, 5 kg onion and 3 kg vegetable ghee than find Laspeyres index by assuming oct-2017 as base year and oct-2019 as current year. Marks: (9+6) 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. IMPORTANT INSTRUCTIONS DEADLINE:  MakesuretouploadthesolutionfilebeforetheduedateonVULMS.  Anysubmissionmadeviaemailaftertheduedatewillnotbeaccepted. FORMATTING GUIDELINES:  Usethefontstyle“TimesNewRoman”or“Arial”andfontsize“12”.  It is advised to compose your document in MS-Word format.  YoumayalsocomposeyourassignmentinOpenOfficeformat.  Useblackandbluefontcolorsonly. RULES FOR MARKING: Please note that your assignment will not be marked, if:  Itissubmittedaftertheduedate.  Thefileyouuploadeddoesnotopenoriscorrupt.  It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.  Itischeatedorcopiedfromotherstudents,internet,books,journalsetc. Note related to load shedding: Please be proactive Dear students! As you know that Pre 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.

Industry supply curve in short-run is horizontal summation of: ECO402