Assignment Cover Sheet

Lecturer’s Comments Form

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Family Name NG Given Names GERALD

Program/Intake DIPHRM12 Student No. 1201

Module’s Name BASIC ECONOMICS Lecturer’s Name FRANKIE YEE

Assignment No. 1 Assignment Due Date 6 JUNE 2010

DECLARATION: I hereby declare that the attached assignment is my own work. I understand that if I am suspected of
plagiarism or another form of cheating, my work will be referred to the Academic Review Committee/Registrar, which
may result in me being expelled from the program. My grade will be affected by the level of plagiarism detected in my
assignment.

Signature Submission Date

Program Manager’s
Elyn Ng
Name

SECTION B: COMMENTS FROM YOUR LECTURER ASSIGNMENT GRADE:

Level of Plagiarism

High Medium Low

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Basic Economics - Assignment 1

PART A
1 D 16 A
2 A 17 D
3 D 18 D
4 B 19 D
5 A 20 E
6 C 21 C
7 A 22 D
8 B 23 A
9 D 24 C
10 C 25 D
11 C 26 C
12 D 27 A
13 D 28 D
14 C 29 D
15 A 30 C

PART B
Q1
a) Business Travelers: 0.42
Family Travelers: 1.09
(refer to Annex A for workings)

b) For business travelers, it is necessary for them to travel due to the nature of the work. At the same
time PED value < 1. Price is inelastic.

For family travelers, going on holidays are expensive therefore it is not a necessity. At the same time
PED value > 1. Price is elastic.

c) For business travelers, the price is inelastic. Therefore, the operator should increase the price of the
room for business travelers. The increase in price leads to a less than a proportionate fall in quantity
demands of hotel room, hence an overall increase in revenue.

For family travelers, the price is elastic. Therefore, the operator should decrease the price of the
room for family travelers. The decrease in price leads to a more than a proportionate rise in quantity
demands of hotel room, hence an overall increase in revenue.

Q2

a) -0.8 Page | 2
 b) 0.8
(refer to Annex B for workings)

c)
i) Required textbooks are a necessity. Necessity goods are considered price inelastic.
Mystery novels are not necessity goods. Hence it is more price elastic compared to required textbooks.

ii) The longer time period product is likely to be more price elastic. Due to the fact that during that period,
other substitutes can be developed. (Example: Solar powered heating system.) Another factor is due to
technological advancement, which leads to vendors requiring lesser oil in production.

ANNEX A

ANNEX B

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