ECO403 Assignment No. 1 Solution

 Solution 1

Nominal GDP	Real GDP	GDP reflector	Inflation rate
92575	92575	100	---
94115	82355	114.3	14.3%
145800	112450	129.7	15.4%

Formulas

For calculation nominal gdp Multiply Ps & Qs from same year llike 200*140+315*205=92575

Etc etc

Asy he bqi b calculate krni ha

Or real gdp me prices 1^st wali use hongi or quantities sub ki baribari lagai jaengy

Llike 200*14+315*205=92575

200*70+315*217=82355

200*200+315*230=112450

GDP Deflator = Nominal GDP /Real GDP *100

Or inflation rate 1^st --, or 2^nd 114.3-100=14.3%

3^rd 129.7-114.3=15.4%

Solution 2

labor force = employment * unemployment

= 164.5+8= 172.5 million

number of people not in labor force= not employed= 8 million

Labor-Force Participation Rate = Labor Force/Adult Population x 100

=172.5/329.8*100 = 52.30 million

Unemployment Rate = Number of Unemployed /Labor Force*100

=8 /17505*100= 4.64 million

ECO403 Assignment No. 1 Solution

 Solution 1

Nominal GDP	Real GDP	GDP reflector	Inflation rate
92575	92575	100	---
94115	82355	114.3	14.3%
145800	112450	129.7	15.4%

Formulas

For calculation nominal gdp Multiply Ps & Qs from same year llike 200*140+315*205=92575

Etc etc

Asy he bqi b calculate krni ha

Or real gdp me prices 1^st wali use hongi or quantities sub ki baribari lagai jaengy

Llike 200*14+315*205=92575

200*70+315*217=82355

200*200+315*230=112450

GDP Deflator = Nominal GDP /Real GDP *100

Or inflation rate 1^st --, or 2^nd 114.3-100=14.3%

3^rd 129.7-114.3=15.4%

Solution 2

labor force = employment * unemployment

= 164.5+8= 172.5 million

number of people not in labor force= not employed= 8 million

Labor-Force Participation Rate = Labor Force/Adult Population x 100

=172.5/329.8*100 = 52.30 million

Unemployment Rate = Number of Unemployed /Labor Force*100

=8 /17505*100= 4.64 million

ECO402 Assignment Solution

Question 1

Part A

Qd= 850-25P

Qs= 500+45p

To find equilibrium price

Qd=Qs

850-25p=500+45p

After solving the equation we have the value of P, which is equilibrium price.

Then put he value of p in any one of the equation of quantity then we have the equilibrium quantity Q.

Part B

For calculating elasticity of demand we have the formula…

Elasticity of demand = Ed = dQ/dP / Q/P

Derivative should b taken of demand function (Qd= 850-25P) with the respect to P

Ed is negative. 

For calculating elasticity of supply we have the formula…

Elasticity of demand = Es = dQ/dP / Q/P

Derivative should b taken of supply function (Qs= 500+45p) with the respect to P

Es is positive.

Question 2

q	TU	MU
0 1 2 3 4 5 5 7 8	0 10 18 24 28 30 30 28 24	--

Mu= dTU/dQ

;;;;;;;;;;;;;;;;;

QNO1

A:

QD=QS

QD=850-25P
QS=500+45P
WE KNOW QD=QS
SO
850-25P=500+45P
850-500=45P-25P
350=20P
P=350/20
=17.5
QS=500+45P
QS=500+45(17.5)
QS=500+787.5
QS=1287.5
AS WE KNOW QS=QD FOR EQULIBRIUM

SO it will be at 1287.5
............

Qd=Qs
850-25p=500+45p
850-500=45p+25p
350=70p
p=350/70
p=5 ( equilibrium price)
Now,
Putting the value of P in eq 1, we will get the equilibrium quantity,
Q=500+45(5)
Q=500+225
Q=725 per bushel

;;;;;;;;;;;;;;;;;;;;;

ECO402 Assignment Solution

Question 1

Part A

Qd= 850-25P

Qs= 500+45p

To find equilibrium price

Qd=Qs

850-25p=500+45p

After solving the equation we have the value of P, which is equilibrium price.

Then put he value of p in any one of the equation of quantity then we have the equilibrium quantity Q.

Part B

For calculating elasticity of demand we have the formula…

Elasticity of demand = Ed = dQ/dP / Q/P

Derivative should b taken of demand function (Qd= 850-25P) with the respect to P

Ed is negative. 

For calculating elasticity of supply we have the formula…

Elasticity of demand = Es = dQ/dP / Q/P

Derivative should b taken of supply function (Qs= 500+45p) with the respect to P

Es is positive.

Question 2

q	TU	MU
0 1 2 3 4 5 5 7 8	0 10 18 24 28 30 30 28 24	--

Mu= dTU/dQ

;;;;;;;;;;;;;;;;;

QNO1

A:

QD=QS

QD=850-25P
QS=500+45P
WE KNOW QD=QS
SO
850-25P=500+45P
850-500=45P-25P
350=20P
P=350/20
=17.5
QS=500+45P
QS=500+45(17.5)
QS=500+787.5
QS=1287.5
AS WE KNOW QS=QD FOR EQULIBRIUM

SO it will be at 1287.5
............

Qd=Qs
850-25p=500+45p
850-500=45p+25p
350=70p
p=350/70
p=5 ( equilibrium price)
Now,
Putting the value of P in eq 1, we will get the equilibrium quantity,
Q=500+45(5)
Q=500+225
Q=725 per bushel

;;;;;;;;;;;;;;;;;;;;;

Eco401 Assignment No. 1 - Solution

Question:
Suppose the market demand and market supply for coffee is given by the following equations:
Qd = 850 – 15P
Qs = 400 + 30P
A. Find quantity demanded and quantity supplied when the price of coffee is
Rs. 8. Is there a surplus or shortage in the production of coffee? What
should happen to the price of coffee?
B. Find the equilibrium price for coffee by using given demand and supply
equations.
C. Prove that the price found in part (B) is an equilibrium price.
D. Show the equilibrium condition in coffee market graphically.
Marks: A = 6(4+1+1), B = 2, C = 3, D = 4 



A

(1)

P=8

Q(d)=850-15(p)

Q(s)=400+30(p)

Put price in q(d) and q(s)

Q(d) Q(s)

=850-15(p) =400+30(P)

=850-15(8) =400+30(8)

=850-120 =400+240

=730 =640

(2)

shortage production because Q(d) is high and Q(s)low is low eight is not equilibrium price

(3) Shortage will increase price



(B)

Equilibrium price

Q(d)=Q(s)

850-15(p)=400+30(p)

45p=450

p=450/45

p=10

Equilibrium price =10

Here demand and supply is equal



(C)

Equilibrium proved

Q(d)=Q(s)

850-15(p)=400+30(p)

850-15(10)=400+30(10)

850-150=400+300

700=700

(D)

Graphical 

...............


A. Calculation of quantity demand and quantity supply

The given equations are
1. Q (d) =850-15(p)
2. Q(s) =400+30(p)
As we know that the given price of coffee is P = 8 Rs.
So, to find out the quantity demand and quantity supply put the value of price P in above equations.
So, Put price in q (d) and q(s)

Q (d) =850-15(p) Q(s) =400+30(p)

Q (d) =850-15(8) Q(s) =400+30(8)
Q (d) =850-120 Q(s) =400+240
Q (d) =730 Q (s) =640

(a) From the above results, we have to know that this is a
Shortage production of coffee because Q (d) is high and Q(s) is low so, eight (8) is not equilibrium price

(b) If there will be a shortage of production that is, Q (d) will be high and Q (s) will be low, then this shortage of that production will increase price.

B. Calculation of equilibrium price by using above equations

As we know that if Q (d) will be equal to Q(s) the price will be equilibrium
So,

Q (d) =Q(s)
850-15(p) =400+30(p)
850-400=30(p) +15(p)
450=45(p)
p=450/45
p=10 Rs.

So, Equilibrium price =10
Here demand and supply is equal

C. Equilibrium proved

By putting the value of equilibrium price in Q (d) and Q (s) we can prove it.
So,
Q (d) =Q(s)
850-15(p) =400+30(p)
850-15(10) =400+30(10)
850-150=400+300
700=700

Thus proved if p=10 then Q (d) and Q (s) will be equal




D. The graph with the help of table.


Price Quality demand Quality supply
9 715 670
10 700 700
11 685 730
......................

QUESTION NO 1 (A)

(1)
P=8
Q(d)=850-15(p)
Q(s)=400+30(p)
Put price in q(d) and q(s)
Q(d) Q(s)
=850-15(p) =400+30(P)
=850-15(8) =400+30(8)
=850-120 =400+240
=730 =640
(2)
shortage production because Q(d) is high and Q(s)low is low eight is not equilibrium price
(3) Shortage will increase price

(B)
Equilibrium price
Q(d)=Q(s)
850-15(p)=400+30(p)
45p=450
p=450/45
p=10
Equilibrium price =10
Here demand and supply is equal

(C)
Equilibrium proved
Q(d)=Q(s)
850-15(p)=400+30(p)
850-15(10)=400+30(10)
850-150=400+300
700=700

(D)

Graphical
Price Quality demand Quality supply
9 730 640
10 700 700
11 685 730

Eco401 Assignment No. 1 - Solution

Question:
Suppose the market demand and market supply for coffee is given by the following equations:
Qd = 850 – 15P
Qs = 400 + 30P
A. Find quantity demanded and quantity supplied when the price of coffee is
Rs. 8. Is there a surplus or shortage in the production of coffee? What
should happen to the price of coffee?
B. Find the equilibrium price for coffee by using given demand and supply
equations.
C. Prove that the price found in part (B) is an equilibrium price.
D. Show the equilibrium condition in coffee market graphically.
Marks: A = 6(4+1+1), B = 2, C = 3, D = 4 



A

(1)

P=8

Q(d)=850-15(p)

Q(s)=400+30(p)

Put price in q(d) and q(s)

Q(d) Q(s)

=850-15(p) =400+30(P)

=850-15(8) =400+30(8)

=850-120 =400+240

=730 =640

(2)

shortage production because Q(d) is high and Q(s)low is low eight is not equilibrium price

(3) Shortage will increase price



(B)

Equilibrium price

Q(d)=Q(s)

850-15(p)=400+30(p)

45p=450

p=450/45

p=10

Equilibrium price =10

Here demand and supply is equal



(C)

Equilibrium proved

Q(d)=Q(s)

850-15(p)=400+30(p)

850-15(10)=400+30(10)

850-150=400+300

700=700

(D)

Graphical 

...............


A. Calculation of quantity demand and quantity supply

The given equations are
1. Q (d) =850-15(p)
2. Q(s) =400+30(p)
As we know that the given price of coffee is P = 8 Rs.
So, to find out the quantity demand and quantity supply put the value of price P in above equations.
So, Put price in q (d) and q(s)

Q (d) =850-15(p) Q(s) =400+30(p)

Q (d) =850-15(8) Q(s) =400+30(8)
Q (d) =850-120 Q(s) =400+240
Q (d) =730 Q (s) =640

(a) From the above results, we have to know that this is a
Shortage production of coffee because Q (d) is high and Q(s) is low so, eight (8) is not equilibrium price

(b) If there will be a shortage of production that is, Q (d) will be high and Q (s) will be low, then this shortage of that production will increase price.

B. Calculation of equilibrium price by using above equations

As we know that if Q (d) will be equal to Q(s) the price will be equilibrium
So,

Q (d) =Q(s)
850-15(p) =400+30(p)
850-400=30(p) +15(p)
450=45(p)
p=450/45
p=10 Rs.

So, Equilibrium price =10
Here demand and supply is equal

C. Equilibrium proved

By putting the value of equilibrium price in Q (d) and Q (s) we can prove it.
So,
Q (d) =Q(s)
850-15(p) =400+30(p)
850-15(10) =400+30(10)
850-150=400+300
700=700

Thus proved if p=10 then Q (d) and Q (s) will be equal




D. The graph with the help of table.


Price Quality demand Quality supply
9 715 670
10 700 700
11 685 730
......................

QUESTION NO 1 (A)

(1)
P=8
Q(d)=850-15(p)
Q(s)=400+30(p)
Put price in q(d) and q(s)
Q(d) Q(s)
=850-15(p) =400+30(P)
=850-15(8) =400+30(8)
=850-120 =400+240
=730 =640
(2)
shortage production because Q(d) is high and Q(s)low is low eight is not equilibrium price
(3) Shortage will increase price

(B)
Equilibrium price
Q(d)=Q(s)
850-15(p)=400+30(p)
45p=450
p=450/45
p=10
Equilibrium price =10
Here demand and supply is equal

(C)
Equilibrium proved
Q(d)=Q(s)
850-15(p)=400+30(p)
850-15(10)=400+30(10)
850-150=400+300
700=700

(D)

Graphical
Price Quality demand Quality supply
9 730 640
10 700 700
11 685 730

Eco401 Assginment No. 1

Semester “Fall 2010”
“Economics (ECO401)”
Assignment No.01 Marks: 15

Question:

Suppose the market demand and market supply for coffee is given by the following equations:

Qd = 850 – 15P
Qs = 400 + 30P

A. Find quantity demanded and quantity supplied when the price of coffee is Rs. 8. Is there a surplus or shortage in the production of coffee? What should happen to the price of coffee?

B. Find the equilibrium price for coffee by using given demand and supply equations.

C. Prove that the price found in part (B) is an equilibrium price.

D. Show the equilibrium condition in coffee market graphically.

Marks: A = 6(4+1+1), B = 2, C = 3, D = 4

Important Note:
􀂾 Calculate to the point where calculation is being required. NO need to write irrelevant material or extra interpretation.
􀂾 Draw equilibrium condition in coffee market by yourself. Do NOT copy from any source. NO need to write irrelevant material.
􀂾 Graphs are very important in Economics course. This assignment will enhance your skill of drawing graphs. A complete procedure of “How to draw graphs in MS-Word” is uploaded on announcement page of LMS. Get help from that uploaded file to solve part D of this assignment.
 

Important Tips:
1. This Assignment can be best attempted from the knowledge acquired after watching video lecture no. 1 to lecture no 10 and reading handouts as well as recommended text book.
2. Video lectures can be downloaded for free from www.youtube.com/vu.
 

Schedule
Opening Date and Time October 26, 2010 At 12:01 A.M. (Mid-Night)
Due Date and Time November 01, 2010 At 11:59 P.M. (Mid-Night)

Note: Only in the case of Assignment, 24 Hrs extra / grace period after the above mentioned due date is usually available to overcome uploading difficulties which may be faced by the students on last date. 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:
Please read the following instructions carefully before attempting the assignment solution.
Deadline:
• Make sure that you upload the solution file before the due date. No
assignment will be accepted through e-mail once the solution has been
uploaded by the instructor.
Formatting guidelines:
• Use the font style “Times New Roman” and font size “12”.
• It is advised to compose your document in MS-Word 2003.
• Use black and blue font colors only.
Solution guidelines:
• Use APA style for referencing and citation. For guidance search “APA
reference style” in Google and read various website containing
information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
• Every student will work individually and has to write in the form of an
analytical assignment.
• Give the answer according to question, there will be negative marking
for irrelevant material.
• For acquiring the relevant knowledge don’t rely only on handouts but
watch the video lectures and use other reference books also.
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
• It has been submitted after due date
• The file you uploaded does not open or is corrupt
• It is in any format other than .doc (MS. Word)
• It is cheated or copied from other students, internet, books, journals etc…

Eco401 Assginment No. 1

Semester “Fall 2010”
“Economics (ECO401)”
Assignment No.01 Marks: 15

Question:

Suppose the market demand and market supply for coffee is given by the following equations:

Qd = 850 – 15P
Qs = 400 + 30P

A. Find quantity demanded and quantity supplied when the price of coffee is Rs. 8. Is there a surplus or shortage in the production of coffee? What should happen to the price of coffee?

B. Find the equilibrium price for coffee by using given demand and supply equations.

C. Prove that the price found in part (B) is an equilibrium price.

D. Show the equilibrium condition in coffee market graphically.

Marks: A = 6(4+1+1), B = 2, C = 3, D = 4

Important Note:
􀂾 Calculate to the point where calculation is being required. NO need to write irrelevant material or extra interpretation.
􀂾 Draw equilibrium condition in coffee market by yourself. Do NOT copy from any source. NO need to write irrelevant material.
􀂾 Graphs are very important in Economics course. This assignment will enhance your skill of drawing graphs. A complete procedure of “How to draw graphs in MS-Word” is uploaded on announcement page of LMS. Get help from that uploaded file to solve part D of this assignment.
 

Important Tips:
1. This Assignment can be best attempted from the knowledge acquired after watching video lecture no. 1 to lecture no 10 and reading handouts as well as recommended text book.
2. Video lectures can be downloaded for free from www.youtube.com/vu.
 

Schedule
Opening Date and Time October 26, 2010 At 12:01 A.M. (Mid-Night)
Due Date and Time November 01, 2010 At 11:59 P.M. (Mid-Night)

Note: Only in the case of Assignment, 24 Hrs extra / grace period after the above mentioned due date is usually available to overcome uploading difficulties which may be faced by the students on last date. 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:
Please read the following instructions carefully before attempting the assignment solution.
Deadline:
• Make sure that you upload the solution file before the due date. No
assignment will be accepted through e-mail once the solution has been
uploaded by the instructor.
Formatting guidelines:
• Use the font style “Times New Roman” and font size “12”.
• It is advised to compose your document in MS-Word 2003.
• Use black and blue font colors only.
Solution guidelines:
• Use APA style for referencing and citation. For guidance search “APA
reference style” in Google and read various website containing
information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
• Every student will work individually and has to write in the form of an
analytical assignment.
• Give the answer according to question, there will be negative marking
for irrelevant material.
• For acquiring the relevant knowledge don’t rely only on handouts but
watch the video lectures and use other reference books also.
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
• It has been submitted after due date
• The file you uploaded does not open or is corrupt
• It is in any format other than .doc (MS. Word)
• It is cheated or copied from other students, internet, books, journals etc…

Eco402 Assignment No. 1

Assignment 01 ECO402

(Fall 2010)
Total Marks 20
Question 01:
Suppose for market of wheat the supply and demand equations in year
2010 are:
Q
d= 850 – 25P 
Q
s=500 + 45P 
A. Calculate the equilibrium price and equilibrium quantity of wheat for
2010.
B. Calculate the elasticity of demand and elasticity of supply; what do
you conclude from these answers whether these are elastic or
inelastic.

(Marks = 5+5)

Important Note:

•
Just calculate to the point in each part.NOneed to write irrelevant 
material or extra interpretation.
Question 02:
The following table shows the quantity of mangoes consumed and total
utility derived from consuming these mangoes.
Quantity of
mangoes
Consumed
Total Utility
0 0
1 10
2 18
3 24
4 28
5 30
6 30
7 28
8 24
A. From the information given in above table, calculate the marginal
utility at each point.
B. Draw Marginal Utility curve.

(7+3)

Important Note:

•
Draw graph of marginal utility by yourself. DoNOTcopy from any source. 
NO
need to write irrelevant material. 
•
Graphs are very important in Economics course. This assignment will 
enhance your skill of drawing graphs. A complete procedure of
“How to 
draw graphs in MS-Word”
is uploaded on announcement page of LMS. 
Get help from that uploaded file to solve this assignment.