ECONOMIC THEORY MBA(G) & MS ASSIGNMENT II

Q.1. The supply schedule for oranges is given below: Price (Rs./dozen) 6 7 8 9 10 Quantity supplied (1000 dozen) 10 20 30 40 50

a) Find arc price elasticity of supply for oranges when the price increases from Rs. 7 to Rs. 8 per dozen. b) Calculate price elasticity of supply for oranges when price decreases from Rs. 10 to Rs. 9 per dozen. Q.2. Q.3. The supply function for a product is Qs = 500P 1000. Calculate the price elasticity of supply at a price of Rs. 10. Home Needs Ltd., produces three products Lam, Tom and Pom. The demand functions are estimated as follows: Ql = 100 4Pl Qt = 1500 20Pt PP = 50 0.1QP Where Ql, Qt and Qp represent quantities demanded of the products Lam, Tom and Pom respectively and Pl, Pt and PP represent price per unit of the products Lam, Tom and Pom respectively. Currently, Home Needs Ltd., sells the products at prices Pl = 20, Pt = 5, and PP = 20. Calculate price elasticities of demand for Lam, Tom and Pom.

Based on the following information answer the questions 4 to 6. The demand function for a Detergent and Soaps Industries Limited (DSIL) for bar soaps is given as follows: QX = 15000 3000 PX + 7Y + 300 PC Where QX = Quantity of bar soaps demanded for DSIL PX = Price charged by DSIL PC = Price of the related product Y = Per capita income of the consumers Assume the current price for every bar soap of DSIL = Rs. 5, price of the related product = Rs. 6 and per capital income of the consumer = Rs. 6000. Q.4. Q.5. The price elasticity of demand for the soap of DSIL at the current value. The income elasticity of demand for the bar soap of DSIL at the current values.

Q.6. Q.7.

The cross elasticity of demand for bar soap of DSIL at the current value. The demand schedule for product Q is given as: Price 5 6 7 8 Find the demand function for product Q. Quantity 25 20 15 10