project Questions.docx - ECO1003 \u2013 MICROECONOMICS CASE STUDY QUESTIONS Each group should write draw their answers on the blank paper provided and

project Questions.docx - ECO1003 u2013 MICROECONOMICS CASE...

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ECO1003 – MICROECONOMICS CASE STUDY QUESTIONS Each group should write / draw their answers on the blank paper provided and submit the answers stapled into one bundle at the end of the exam. 1. Identify the determinants of demand on cars in this case study and state whether they are shifting demand left or right. (3 determinants). Show the effect on the car market using a labelled graph. (6 marks for correct shifts 3x 2) 2. The Motor Transport Authority (MTA) expects that new car sales will decrease from 48,500 cars in December to 46,950 cars in January due to 5% Value Added Tax (VAT) in 2018, which will be completely passed on to consumers. Calculate PED, state whether it is elastic or inelastic, and, state what manufacturers and dealers should do to maximize revenue. (4 marks total – 2 x 2 marks) 3. If household income in the GCC has decreased 18% over the past year, and new car sales in the region have decreased from 1.1 million to 875,000. Does this indicate that cars are normal or inferior goods? Show your calculations. (2 marks) 4. Given the information in the case study, calculate the cross price elasticity of demand between personal cars and ride sharing services in the UAE.

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