1

Assignment#1

Name: Muhammad Rizwan Tariq

Student ID: DC200200221

Subject: ECO401

Program: PGD Business Administration

2

a)

Equilibrium Price and Quantity

At equilibrium Qs=Qd

As Qs and Qd is given Qs=300+20P and Qd=1900-60P

So 300+20P=1900-60P

20P+60P=1900-300

80P= 1600

P = 1600/80

P =20

In Equilibrium Qs=Qd=Q=300+20(20)

Q = 300 + 400

Q= 700

b) Calculate Price Elasticity of Supply using point elasticity method when dMart is
in Equilibrium

Price elasticity for point method

dQs/dP (P/Q)

as we know Qs =300+20P

so dQs/dP =0 +20(1)

dQs/dP =20

so Price elasticity of Supply will be = 20 *(20/700)

=400/700

Point Elasticity of Supply = 0.57

3

c)

Improving technology will have impact on supply curve

Supply will increase

Equilibrium price will decrease

Equilibrium Quantity will Increase

Impact on Supply Impact on Price Impact on Quantity

Increase Decrease Increase