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Semester "Spring 2010" "Economics (ECO401)" Assignment No. 01 Marks: 20 Question 01 Suppose a hypothetical economy produces two

A. Draw the demand curve for wheat.
B. Draw the supply curve of wheat.
C. Determine the equilibrium in the wheat market with the help of graphs.
D. If there is an increase in the price of rice, what will be its impact on the market
equilibrium? Show graphically.
E. If government imposes tax on wheat production, what will be its impact on
market equilibrium? Show graphically.
Semester “Spring 2010” “Economics (ECO401)” Assignment No. 01 Marks: 20 Question 01 Suppose a hypothetical economy produces two goods i-e wheat and rice. A. Draw the demand curve for wheat. B. Draw the supply curve of wheat. C. Determine the equilibrium in the wheat market with the help of graphs. D. If there is an increase in the price of rice, what will be its impact on the market equilibrium? Show graphically. E. If government imposes tax on wheat production, what will be its impact on market equilibrium? Show graphically. (Marks: A = 2, B = 2, C = 4, D= 3, E = 3) Important Note: o Just draw graphs in each part by yourself. Do NOT copy from any source. NO need to write irrelevant material or interpretation. o Graphs are very important in Economics course. This assignment will enhance your skill of drawing graphs online. A complete procedure of “How to draw graphs online in MS-Word” is uploaded on announcement page of LMS. Get help from that uploaded file to solve this assignment. Question 02 A. In the above graph, price is plotted on the vertical axis and quantity is plotted on the horizontal axis. From the information given in the graph, calculate price elasticity of demand from point A to B. B. Suppose the price of Pepsi rises by 8%, as a result demand of Coca Cola increases by 11%. Calculate the cross price elasticity of demand for Coca Cola. 0 Price 10 17 5 A B 9 Quantity
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(Marks: A = 4, B = 2) Important Note: Just calculate to the point in each part. NO need to write irrelevant material or extra interpretation. 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 . 3. Watch video lectures and give answer according to the material discussed in video lectures. Avoid cheating from Internet and handouts or cheating from each other. Cheating will be strictly marked as zero and NO excuses will be accepted in this regard. Schedule Opening Date and Time April 26 , 2010 At 12:01 A.M. (Mid-Night) Due Date and Time April 29 , 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
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