Assignment Name : Economic

Student Name : Kyaw Swar Hein

Lecturer Name : U Thein Ko
Module Name : Fundamental of Economic
Business Management : 19C Economic

1.
(A) Which of the following world result in a decrease in the supply of computer?
(a) An increase in the wage of workers in the computer industry.
(B) Which of the following will Not cause a shift in the demand curve for rice?
(b) A decrease in the price of vegetables (a complement to rice).
(C) When the central bank sells $ 1,000,000 worth of government bonds to the public,
the money supply.
(d) Increase by $ 1,000,000.
(D) Suppose a perfectly competitive firm collects total revenues of $ 1,000 when it
produce 200 units; the marginal cost of producing 200 units is $ 5. The firm should
(e) Leave production unchanged because price equal marginal costs.
(E) If the share of population employed increases, real GDP per person:
(d) Fluctuates
2.
(a) What happens to the demand curve of bread when:
(i) The consumers’ income increases?

D0 D1 (Increase demand)

The demand curve of bread shifts to the right when consumer’s income increase.
Assignment Name : Economic
Student Name : Kyaw Swar Hein
Lecturer Name : U Thein Ko
Module Name : Fundamental of Economic
Business Management : 19C Economic

2.
(ii) There is a decrease in the price of biscuits, its main subtitles?

D1 D0

The demand curve of bread shift to the left when there is a decrease in the price of
biscuits.
(b) What happen to the supply curve of car when:
(i) The workers in the car industry successfully demanded a higher wage?

S1
S0

(Decrease in supply)

The supply curve of car shit to the left when the workers in the industry successfully
demanded a higher wage.
Assignment Name : Economic
Student Name : Kyaw Swar Hein
Lecturer Name : U Thein Ko
Module Name : Fundamental of Economic
Business Management : 19C Economic

2.
(b)
(ii) Many producers leave the industry due to poor prospects?

S1
S0

When many producers leave the industry due to poor prospects, the supply curve of car
shift to the left.

3. Explain changes in respective market equilibrium price and quantity with a suitable
diagram for the following incidents.
(a) In the computer software market, the number of companies selling computer software
decreases.
Assignment Name : Economic
Student Name : Kyaw Swar Hein
Lecturer Name : U Thein Ko
Module Name : Fundamental of Economic
Business Management : 19C Economic

3.
(a) In the computer software market, the number of companies selling computer software
decreases, the supply decrease, the equilibrium price rises and the equilibrium quantity decrease.
(b) In the market for bicycles, there is a fall in the price of steel used to make bicycles.

In the market of bicycles, if there is a fall in the price of steel used to make bicycles, the
supply of bicycles increases. When the supply increase, the equilibrium price decrease and
equilibrium quantity increase.
4. A seller of a product Z discovered that when the price of another product W is $5 per
unit, he can sell 750 units of Z. When the price of W increases to $6.50, he can sell 580 units of
Z. Calculate the cross elasticity of demand between Z and W.

∆QD2 = 580-750 = -170

AvgQD = (750+580)/2 = 665
∆Pw = $6.50-$5 = $1.5
AvgP = ($6.50+$5)/2 = $5.75
CED = %∆QD2/ %∆Pw
∆ QD2 AvgP
= ˟
AvgQD ∆P
Assignment Name : Economic
Student Name : Kyaw Swar Hein
Lecturer Name : U Thein Ko
Module Name : Fundamental of Economic
Business Management : 19C Economic

170 $ 5.75
= ˟
665 $ 1.5

= 0.256 ˟ 3.833$
= 0.97 $
5. The close economy produces, bread, cloth and rice, in 2006 and 2007, as shown in the
table below.
2006 2007
Item
Price Quantity Price Quantity

Bread $ 1.60 200 $ 2.00 250

Cloth $ 3.00 300 $ 5.50 450
Rice $ 1.50 180 $ 1.80 220

(a) Calculate the nominal GDP and real GDP in both 2006 and 2007, taking 2006 as the base
year.
Nominal GDP 2006 = ($1.60 x 200) + ($3.00 x 300) + ($1.50 x 180) = $1490
Nominal GDP 2007 = ($2.00 x 250) + ($5.50 x 450) + ($1.80 x 220) = $ 3371
Real GDP = $ 1490
Real GDP = ($1.60 x 250) + ($3.00 x 450) + (1.50 x 220) = $ 2080
(b) Compute and compare the nominal GDP growth rate and real GDP growth rate between
2006 and 2007. Which growth rate will give a more accurate indicator on the performance of the
economy? Justify your answers.
$ 1490 - $ 3371
Nominal GDP growth = x 100% = 1.59 %
$ 1490
$ 1490 - $ 2080
Real GDP growth = x 100% = 0.15 %
$ 1490
Assignment Name : Economic
Student Name : Kyaw Swar Hein
Lecturer Name : U Thein Ko
Module Name : Fundamental of Economic
Business Management : 19C Economic