Bachelor of Law and Legal Studies

Subject: Introduction to political economics

Instructor: Dr. Hebatallah ADAM
T.A.: Noha Hesham

Tutorial V. “The Neo-Classical School”

I. ESSAY QUESTIONS
1. What is the difference between classical and neo-classical approach in
economics?
2. “Despite that there is different type of sub-schools of the neo-classical
school, there is some common characteristics that describe its main
ideas”. Comment on this statement explaining these ideas
3. What is meant by the marginal revolution?

II. Application on Price adjustment mechanism and market equilibrium

The demand and supply schedules for Quantity Quantity
gum are in the table. Price demanded supplied
a. Suppose that the price of gum (cents per pack) (millions of packs a week)
20 180 60
is 70¢ a pack. Describe the 40 140 100
situation in the gum market and 60 100 140
explain how the price adjusts. 80 60 180
b. Suppose that the price of gum
is 30¢ a pack. Describe the situation in the gum market and explain how
the price adjusts.
c. A fire destroys some factories that produce gum and the quantity of gum
supplied decreases by 40 million packs a week at each price. Explain
what happens in the market for gum and draw a graph to illustrate the
changes.
d. If, at the time as the fire the teenage population increases and the quantity
of gum demanded increases 40 million packs a week at each price. What
is the new market equilibrium? Show the changes on your graph.

HEBATALLAH ADAM 1