ECO 102

ASSIGNMENT 2
DEADLINE: 9TH October 2018 (in class submission)
No late assignments will be accepted

Question 1
For the following questions, show the changes in demand diagrams (different diagram for each
question) (2 x 4 = 8)
A. Income of people increased
B. Price of substitute good decreased
C. Price of complimentary good decreased
D. Product got out of fashion

Question 2
For the following questions, show the changes in supply diagrams for shirt (different diagram for
each question) (2 x 5 = 10 marks)
A. Price of t-shirt increased
B. Technology improved
C. Number of producers increased
D. Producers expecting price to rise next month.
E. Price of thread increased.

Question 3
For this question, you will show all changes in the ONE DIAGRAM.

A. Equilibrium price of beef is 200 taka/kg and equilibrium quantity 500 kg. Show this in a
diagram. (2)
B. Due to fall in price of chicken and import of Indian cow, new equilibrium price in market
is 150 taka/kg and equilibrium quantity 600 kg. Show this in same diagram as in A. (3)
Question 4

When price of Artisan trousers decreased from 800 to 700, quantity demand increased from 1000
to 2000.

A. Calculate price elasticity of demand (PED). (2)

B. Is PED elastic or inelastic? (1)
C. Interpret your PED result. (1)
D. Draw this demand curve. (1)

Question 5

When price of rice increased from 65 to 70 taka/kg, quantity supplied increased from 500 kg to
510 kg.

A. Calculate price elasticity of supply (PES). Calculation same as PED. (2)

B. Is PES elastic or inelastic? (1)
C. Interpret your PES result. (1)
D. Draw this supply curve. (1)
E. What is PES for cell phone frequency? Explain (Hint: in the book, Chapter 6). (2)