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The price p and the demand x for a product are related by the price demand equation x + 300p = 6000. Find the elasticity of demand E(p) interpret E(2)
Given the Utility Function is U = X
0.7Y
0.3 and Budget is taka 300. The original price was
(Px, Py) = (2, 2) and the new price is (Px’, Py) = (4, 2).
(a) Draw an angle curve for X by using the above information [Labelling is must]
(b) Calculate the value of Compensation variation (CV) and Equivalent variation (EV)? [10]
[ ordinary demand curve]
1. Let’s say there are two goods X and Y (respectively draw in x-axis and y-axis). Assume, X is
a normal good and Y in an inferior good. If price of X is increased, show the income and
substitution effect in the graph and explain.
2. Evaluate whether it violated or justify WARP conditionality: A consumer makes the
following choices (when you develop the matrix, show the calculation process for the first row)
a. At prices (p1,p2)=($4,$4) the choice was (x1,x2) = (20,4).
b. At (p1,p2)=($2,$2) the choice was (x1,x2) = (10,10).
c. At (p1,p2)=($2,$4) the choice was (x1,x2) = (10,8).
3. Given the Utility Function is U = X
0.7Y
0.3 and Budget is taka 300. The original price was
(Px, Py) = (2, 2) and the new price is (Px’, Py) = (4, 2).
(a) Draw an angle curve for X by using the above information [Labelling is must] [5]
(b) Calculate the value of Compensation variation (CV) and Equivalent variation (EV)? [10]
[Hint: Use the knowledge of chapter 5 and 6 to get the solutions for ordinary demand curve]
Let’s say there are two goods X and Y (respectively draw in x-axis and y-axis). Assume, X is
a normal good and Y in an inferior good. If price of X is reduced, show the income and
substitution effect in the graph and explain.
Evaluate whether it violated or justify WARP conditionality: A consumer makes the
following choices (when you develop the matrix, show the calculation process for the first row)
a. At prices (p 1 ,p 2 )=($4,$4) the choice was (x 1 ,x 2 ) = (20,2).
b. At (p 1 ,p 2 )=($4,$2) the choice was (x 1 ,x 2 ) = (10,10).
c. At (p 1 ,p 2 )=($2,$4) the choice was (x 1 ,x 2 ) = (10,8)
Assume there is an increase in the price of the wood used in the production of kitchen tables. Illustrate and explain how this would impact the equilibrium price and quantity of kitchen tables.
Assume Thailand is a petroleum exporter on the global market. Draw the petroleum market in Thailand before and after international trade using a demand and supply graph (draw a graph), assuming the world price for petroleum is above the Thailand petroleum market before open for international trade. Identify and show (draw a graph) the change in consumer surplus, producer surplus, and total surplus seeing as Thailand is now open for international trade. Additionally, give some explanations for what happened.
- If an increase in the supply of water bottles leads to a 6 per cent decrease in the price and a 5 per cent increase in the quantity demanded, the price elasticity of demand for water bottles is
- A. 0,6
- B. 0,3
- C. 0,83
- D. 1,2
- Which one of the following statements is incorrect?
- A. The price elasticity of demand is expressed as a ratio which is known as the elasticity coefficient.
- B. When calculating the price elasticity of demand, one has to take the absolute value of the result.
- C. If there are large fluctuations in price, the arc elasticity formula should be utilised.
- D. If the elasticity coefficient is calculated at a particular point on the demand curve, it is called the arc elasticity.
A) Which firm has a dominant strategy? (2) What strategy should each firm follow? (2)
B) Assume that the game is to be played an infinite number of times. (Or, equivalently, imagine that neither firm knows for certain when rounds of the game will end, so there is always a positive chance that another round is to be played after the present one.) Would the tit-for-tat strategy would be a reasonable choice? Explain this strategy. (6)
C) Assume that the game is to be played a very large (but finite) number of times. What is the appropriate strategy if both firms are always rational? (4)
