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.
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)
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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
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ECO401 Quiz 3 Solution and Discussion
-
Overestimation of national product in national income calculations is known as:
-
Suppose if investment rises by Rs 100 billion at each price level. If the value of the multiplier is 4, what is the amount of change in real GDP demanded at each price level?
-
The aggregate supply curve is the relationship between the:
-
If leakages into the circular flow of income rise, then the value of multiplier will:
-
In Keynesian economics, an inflationary gap results if aggregate expenditures are:
-
Gross Domestic Product is:
-
Unemployment due to changing job or due to movement around the country is known as:
-
Unlike the Classical economists, Keynes believed that the economy could get stuck in the short run for a significant period of time because:
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