OME ASSIGNMENT-1

Answer 1

S.No. Type of Laptop Laptop Models with prices Companies

1. Gaming Dell G15 Rs. 74990 Dell
HP Pavilion 15-ec1050AX Rs. 77122 Hewlett Packard (HP)
2. Premium MacBook AIr Rs. 92900 Apple
Legion 5i (15) Rs. 70890 Lenovo
3. Home/Basic Acer Extensa Rs. 26499 Acer
Inspiron 15 3000 Rs. 39490 Dell

Answer 2

A) Rightward shift in Demand

B) Rightward shift in Supply

C) Rightward shift in Supply

Answer 3

A rising demand does not always mean that price will rise. It also depends on what is happening
at the supply side. So, despite of the increasing demand for electronics, the price is decreasing
because there has also been a corresponding increase in the supply, and the increase in supply
more than offsets the increase in demand. We see new players entering the market and catering
to all categories of consumers whether at budget end or at premium level. Another reason is
that suppliers have found innovative and lower cost methods of production, which also brings
the price down.

Answer 4

Good Y is a substitute for X, while Good Z is a complement for X.

Answer 5

A) The cross price elasticity of Good Y with respect to Good X is 1.

Cross price elasticity = % change in QD of Good Y/ % change if P of Good X

=1

B) The goods are substitutes of each other. An increase in price of Good X leads to increase in
quantity demanded of Good Y.

Answer 6

A) QD = 2048 – 19.2P
QS = 256 + 25.6P

B) 1.2 QD = 0.9 QS
1.2 (2048 – 19.2P) = 0.9 (256 + 25.6P)
46.08P = 2227.2

P = 48.33 Q = 1344

Answer 7

The long-run demand can be less elastic than short-run demand for products which need
replacement, like electronics (Microwave ovens, refrigerators, etc.). This is because customers
can cut back on their spending by delaying the purchase decision in the short run, but they will
eventually purchase a new product in the long run, when the older product becomes obsolete
and starts wearing out. As a result, a price increase can lead to a fall in quantity demanded in the
short run, but the quantity demanded in long run won’t decrease much.
 Submission by
PGP/25/311 – AADIT AGGARWAL