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1stYear BS (Hons.) 1stIncourse Assignment 2020

Subject: Applied Mathematics
Course Title: Principal of Economics
Course Code: AMTH 105

Student’s Name Jannatul Nayeem

Roll Number SK-020-017

Current Session 2019-2020

Registration Number 2019618319

Admission Session 2019-2020

Google Classroom ID Name Jannatul Nayeem

Google Classroom Gmail farsia14@gmail.com

Date of Submission 2.04.2021

Submitted To

Shafiun Nahin Shimul

Associate Professor
Institute of Health Economics
University of Dhaka
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Section-A
1. False-“It is not possible for demand and supply to shift at the same time”.
Demand and supply can shift at the same time. Factors like change in income of the
consumer, technology, change in taste or change in preference of consumer can cause the
shift in demand and supply at the same time. For example-If the production cost of a
particular product decreases, supply of the product will increase definitely. Also if the
preference of people changes and they demand the product more, the demand will also
increase. In this case the demand and supply both curve will shift to the right and they will
create a new equilibrium. Not only in increasing, this can happen in other cases where
demand and supply both decrease or one of them increases/decreases. So it is possible for
demand and supply to shift at the same time.
2. True-“A decrease in demand will cause a decrease in price, which will
cause a decrease in supply”.
If the demand of any product decreases, initially its supply will increase. But as a
consequence of increasing supply, the price will fall. That is the price of the product will
decrease. For this reason producers will not be willing to produce that product. Therefore
finally the supply of the product will also decrease. For example- Day by day people are
preferring steel or plastic strainer to bamboo strainer. That is the demand of bamboo strainer
has decreased. As a result we do not see bamboo strainer very much and this have become
very cheap in price. So because of decrease in demand of bamboo strainer, its price and
supply both has decreased. Therefore the above statement is true.

3. True-“An increase in supply will cause a decrease in price, which will

cause an increase in demand”.
An increase in supply will definitely cause a decrease in price which will increase its demand.
For a rational consumer it is obvious that when they get something in cheap price they tend to
buy it more. For example- in the last days of winter season the supply of tomato increases and
its price also decrease. Like in the first days of winter it was 120tk per kg but at the end it
becomes 10tk per kg, which is a very much decreased price. For the cheap price more
consumers are buying it in a good quantity and storing it by making sauce or otherwise. Here
we see that the supply of tomato has increased and its price has decreased. As a result its
demand has increased. Therefore the above statement is true.

Section-B
5. (a) answer:
There is difference between a “change in demand” and a “change in quantity demanded”.
Change in Demand: A change in demand means that the entire demand curve shifts either left or
right. This is because of change in tastes, income, preferences, price of substitute or complement
goods etc. In the graph we see that the demand curve (D1) shifts to the right and became D2
(increased) and shift to the left & became D3 (decreased).

Price

D2
D3 D1

Quantity
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Change in Quantity Demanded: A change in quantity demanded refers to change in quantity

purchased due to increase or decrease in the price of a product. It conducts a movement along the
demand curve. The cause of change in quantity demanded is the change in price. In its graph, we see
that the initial demand curve isn’t moving right or left that is it’s not shifting rather we are moving
alone the initial demand curve.

Price

D1

Quantity

(b)answer: i. a change in the price of a related good – Change in Demand

ii. a change in tastes – Change in Demand
iii. a change in the number of buyers – Change in Demand
iv. a change in price – Change in the Quantity Demanded
v. a change in the consumer expectations – Change in Demand
vi. a change in income – Change in Demand

6.
(a) answer: The demand of ‘diamond’ will be more price elastic than water. Because diamond is a
luxury good whereas water is necessary good. Since luxury goods are more elastic, diamond is more
price elastic than water.
(b) answer: Nasal decongestant spray will be more price elastic. Because insulin is necessary and
has no substitute. But nasal decongestant is less necessary and has many substitute. Therefore it will
be more price elastic than insulin.
(c) answer: Breakfast cereal will be more price elastic than food in general. Since breakfast cereal
is luxurious cause it has many substitutes. Therefore breakfast cereal is more price elastic.
(d) answer: Gasoline over the course of a year will be more price elastic than gasoline over the
course of a week. Because it will be less necessary and long time consuming. So gasoline over the
course of a year will be more price elastic.
(e) answer: Dell personal computer is more price elastic than personal computers. Because it be
luxurious comparing to other personal computer. Also it has more substitutes. Therefore Dell personal
computer will be more price elastic than personal computer.