Analysis of Demand, Supply and Market Efficiency Exercise __NUMERICAL EXERCISE HAMM MES 1, The following demand functions are the demand function of individual A, B and ¢. Find out the market demand function Q=10-3Px + Qu= 24-59% Qe=20-4Px SN Given Demand function of individual A, Band Care Qu=10-3P% Qe = 24-5Ps 20-4Px Market demand function Qs =Qa+Q+Qc = (10-323) + @4- 5Ps) + 20-40%) =54-12P Hence, the market demand function is equal to 34 ~ 127 2 Derive demand function fom the following demand schedule; __ Pr 0 20; SETS . Se ‘According to question Autonomous dema (y= 400 Slope of demand curve (b) = We know that Demand function: Qy = a~ bP Qe = 400-107 3. Let, autonomous demand is 10 and slope of the demand curve is 2. Derive the linear demand function. {SOLUTION Given Autonomous demand (a) = 10aRaR sca showsthe mount of sndich bough ayy, ol Supply function Q.= 2+ 8P @ Forequiium, aso value of P in demand equation () or Supply equation (i 8 Q ence euiirium price Re 1 and equim quanti 6 awun TO micROECONOT ‘cinpeven Sandor of poomcan ee alouuTl0n MANUAL TO MICROECONOMICS FOR BUSINESS a pF posed Hence elim price RS 4 St pce Re 2 demand 6 uit and opp 64 i, Hee Sis demand a demond = Q)- sue routs sem-1595 0 [price Rs. 5 demand i and apply 6 10 nits Tiss case feces spp cee apply =Q-Qs 10-5 Sunt Suppose the demand fancion Qe = 1000-20P and supply fx 2100 +40° “al 2. Fillupthe table given below. ‘ip the abe pres A Praha) Cony Oemanded() — Cunt Sopp 5 1. 5 Find equlibrom price and quantity algebra, © Show Qé,Qrand prices inthe graph Given Peis ‘Ths equa pie" R15 Pat the ale of Pin demantand sappy function we ge d= ttm -2015=70 5 10+ 40 15=700 “Ths eqlilrom quany = 700 nts apammati repesenation of QM Qsand pie ‘Suppose the demand function for a commodity Xs Dx = 150~SPcand supply function Se 10% Billupthetabe given below: rca ins (P)_—_CutiyDonandedDa) | Ouaniy Sued tically, Show dean, curve, supply curve and equim price inthe graph Given Demand fenton: De=150-8Ps =) Supply fantom = 10s =a)InicRogCONONICS FOK wuDIME D> 8B SOLUTION MANUAL TO jis oF DEMAND, SUPPLY AND Manner FS = Fence epi ie 8. 10am quantity is 10. rcs wer above cium pce quan Sande Ta statin lo krowm a8 Gearplus drwes market towards quibrui. ere below te cquliiam pri, the quiniiesdomaned wouk! he uantis suppl Ths station known se the shortage The In the above dag, the equim point Hence the eg amy 10 and ogi prices R10. (6 Themtetfor We as owing demand and supply schedule: 3 Gephthe dane and soppy ave What ella price ‘quantity at this market? Z sgh aaya menoeconowter ron neem sovytion WAN vmarden 0 (cs) AGE 1 Consumer’ urs whiac.ce 1 40-9 505 AGF rodocets surplus 8) mcs+PS. 505 +525 =n ect demand fonction Q# 100-27 ad supply faction, y= 75 nt 207850, yum pice and quantity me’ surplus and produce’ surplus sur oS Denn frstion "100-2 Sarpy fncton Q.= 75 *5P 4 Foroglibriom, po Banas Pting the vals lof Pin demand fa leon nan econ, quantity 6 50 arate 1 4.60-)9) 13 ‘Proce susplus(PS) = Aro SGEF 1 =}05-1950sever annua romenozeovomen syn rremeet 2 commodity 1 Q = 100 ~ 5 “The demand func clascy at rice 0-5? 100-5 * 10=50 made (9) =20* 2. Lips 213=2050=70 Troponin tho rpc fos) ean Hence. MR Rataq mcnoecoranes FOR BUBIESS ae 70 0 RS 75 ss travelers and etal quant demon ‘New guaity demanded (= 1 Webzow tat pecorino Ar asay 2) --03 Since = 023 thsisthe can of wail nate demand for ses ycaenets Intl price (F) R200 ‘New pce) = Rs. 25,00 Inbal quantity demanded (@)=8 [New quay deans (Q) =6 Weknow tat cong bo Ar Esti New ant ‘Changin quant demanded (90) = Qy-Q= 200-200 =—100 us Weknow at he flows sastcity of demand for commodity ‘near ries ot Rs. 10090 oR 15000 and determine what peunt ro wicRoeconowl 0, Coke and Peps are subsite increase in demand foe centage a iF 6 Consider the following table 3 interpret thers66 Qe } ‘The tut ar feed has decreased 1 9880.4 unis det increase ng ‘Merincasin pic tee srr total even un — Analysis of Consumer's BehavioroR BUSINESS: ies 20 sowuion wanuat 0 mesDECOND (y=Re2000 ot a bog ine orbs asa TGP QB 2000 dar uon fa consume ast income RE 3.000 a4, dee bands Trespeciey Soe edn ates0_ ParlgndY Y= RA7 ra ear ume) Fe 3 let a peng moieass mans nS in fe bln HP 6B =e pre ution of te badge ine M represent given mane income adele onsume spice of good X, Pr spice of goed Y, yg and Ge quit of god Yeorsamer, Rs $0,Pr= Be 25 and B= AS. 1.500.Skch budget lin nt eo . Freeland X()=R650 Pol pod (= 25 Paiptanea ecco) 150 To tin of hep etait Ts ies pon ‘Whetal be rice ofthe consumer spent ong X, B13) a [Anavrsis oF CONSUMER'S BEMAVIOR UNIT 3 7. Find. slope of the budget ine when budget income is given af 50+ 250) = 5,00, Budgeting equation 500s +2055 000 0 8. Levessuppos,a consumer hat linited income which he spends on good X sd good. pod Xis Re 30and markt price af 004 Vi 1s 40 When s/he draws his rhe budget nit termiatsX un Price fg Y (A) = Re 10 specie tae ine y= (-R) = (-B) 085 FOR BUSINESS 22 sovumon wanun romenoteonOue Plott petemine were the BO salution a Nagi aay change wal wt unt. ss so Mv wher MU = Marin wy of X-men 1s T= Changeimtal lity of comity $1Q.= Changin quntiy of Xconmoity ae ty do 19 an additonal hy ng Spent Re. 2in X-conmoty a 1b Byecesuming 2 unis of X TU ro for the the nda ae ow tah af and ¥ he edd shold purchase to ine ty.|, 24 socvrion wanvat ro micRaEeey= Show that the cont Satie when tend ube consumes ony good % TU = 50 uti consumes ly good, T= 38 ts 4 Consider the following table, which consists ofthe indference schedules a a ay Tenia 0:0) ON) Coax) OO om O10) Ory indiference curve yields bi ction an wi? Epi substtuon of Xand Y (MRS) at point 8 point Won IC rence map i defined as thes of inden cu Sth alleen of wo or more nde curve in ‘finders carves shown nthe flowing pu, SE men's BewAvion UNIT omy » s+ (-3) - 5 Letussuppose ceo goods. 10and pie nny income fh housed i Rs. 600 al o Bet oreo a Eguston of te budgie or badge constants PQ QB 8 spel his/her badge gos Y, 2%SOLUTION MANUAL the consume 2 a roan Bg econding toques pints Ai 80) and B10, 0, economies run eessmae 4 soci tote on Pa or icome ofthe conser TEASE R59 iM tnccrgumer spends al his/her age on a Y ‘oo onag-e Hens A, {fe cosa spends alot his/her ut on go % Hee B430,0) Meee beet ine AB ng pits Ad 2) and Bx, 0.1 shown Uhefolloning gue ne mo a conse dod. On {following questions: ete 5 price of gad X is Rs, 40 and prc of god Vis Re 20. The he spends al Information answer de Awavvss or Consumer's Bevavion units 27 Rs 20. Draw new budget 1s to Rs. 40 remaining price of gor shin budget ine? 2 ie) = 1000 Seco spends all of his/her budget on good ¥, 10 0 Hence, AO, 50) sumer spends all of hi/her budget on god X Hers B05 0) i Than net budgt le ce poe tne AB oeug. points A 5) and BoE oTiscbonn se owing ee Tete Cree pI dary ee oy arate oc Fee santuineetnignt es, 4640) ‘Ts ent ons A 3 and 0,0), we get ag tino pee AB {hh showin thee gre ‘Beng gosta pos Sg (nas Re. Band pre of food X nos contig ate {Paecnsume spend tier bugs gn, ‘ick showin the lowing BeateJonommee swe earns eroEC! 28 sovurion manuat 10 mIeRO cou ose vasttin in igi ect te areRadeor pret nd rte arena dr Lite ecm ae AE en path on ets clone income equally on £90045 Xj the budget mer spel oh orr budge on god Y, 8 sam 10 Away consumer pens alla is oe ust on goa X, 6 Avacrsis of Consuwen's Benavion unr 29 oan Sy” tine jing the pent 10 remaining, ‘Thos the Hence B (0) The badge! ine AB is obtained ag the post A, an BY, OS sown te fowing tigre “Acorn © question the consumer spends Rs. 3 on good X and 6.2400 fon goo Yate alm pie of god X Thus, Bj 32a Ba ssunts ye = Aa umis “The pace demain carve DD fo good as oon drawn inte eowng gu. Tis downward sping0 ya ro moecononics FOR BUSINESS \ omic LUTION MARUA is or Consuwer's Beravion oniTs 3 ot his er budget on good. ot hisor her bgt on gore X ives ing the ott A 10 and BG, the consumer acts entre budget ea beam at pint 25,5) onthe fps to Re Ot, renasing price of god Y and ang constant. Then of hs rr income on go Hence (0.10) Hee B (10,0) ‘he Bet ine AB i bine fining he pont NO, 10) and sow inthe fg gare 4 —_Asoring to questo alter all in pice of gpd X. de consumer sper {ton got X nd Re 2400 good. The 520 aR Mt sams ‘The now equim pits eine at pin 4 AB Tiss nthe lowing ge {©The pce dead curve for gua X Is denna by the pf owing falls to Rs 40, hatch the new budget con ith constant rice oY god and consu 4 the new ba ineR BUSINESS 32 snusron ssn 0meree nN fete} ot bios Dement cong onside the follwing. consumption preference chedul ‘ear leg te consempion preference chedlesicn > ‘Conbraio Food Enerainae Condo Food — Eneranae i at "s ye ————————__ Avacrsis oF Consumen’s Bevavion unis 39 00 Price of fod per wit 10 per wait but the price of changed. Daw fon of food and the consume pedal iso her budget on god X oreo 8-2 wuie meine Se ga ei greitaprte ate nara eee seve eee eon ee Oop uns es A 040) ihe consuiner spends allo his rhe bdget on god X,NESS c$ FOR BU 34 soturion nawuas ro menoeconowies FOF Production, Cost, and Profit Analysis Exercise as i Tm NUMERICAL ENEREISE Ream ‘hat would be fred tn the workers when MRP = 100 3Landw= 2. umn esta MRP. = 100-31. ‘The wer pal of their shows dr cls down ping ad shows " eet the easel employ 0 ito ib arate RSA 3. Let production fncion, Q™= 10L + SL =, eampute marginal produc function Production function. Q* 16k. +SL'=12Production fenton Q = a00LR"* | a=04 p08, Re 2, price of labour (RRs Sand C that abo ipod along the X- Price ofthe tour) = R65, rice ofthe capital Pa) = B62 We know Bat ‘Slope: cine (8) ral products bebween te inpts (Labour3B SOLUTION WANUAL TO MICROECONOMICS FOR BUSINESS Hence, he ratio between marginal product of abour an ap 1A fiom produces 10 units of urpt, where its total fixed cos 2 Rs, 100andtotlcostis Rs. 250. Find TVCand AVC. Let cost fonction (C}= 868+ 490 + 0.5. What the vale of ed cost? Given Cot function: C= 868+ 499 +052 sar When outpat(Q) equals zr Yt cox comes eu ttl Baal cost. ‘Then puting Q= 0. Ch naeR 90+ 0540: CHa te HERE ede FO) = 8 Suppose frm produces an output of 10 units where the fms’ SAC=LACSMC= RS. 25 Whats the LMCat this level of outpt? SAC LAC SIC *LMC LMC sao Rs. 25. Complete the following table We inow tha TC remains constant and TC the sum of TVC ant TEC. a EL PPE PRODUCTION, Cost, anpp ROFIT ANALYSIS. UNIT 6 8 g Suppose that a frm’ production owned and prof [SoLuTIONy Given Business profit Rs 25.00, Implict cost, ie. price of face of production owned and use the entepreneut = RS 20100 eno profit = Busines prt = 33000-2000 Compe arm Fae Pond MP and explain ther etn efrenc to law of variable proportionsONOwICS FOR BUS! ‘There ae tae aps of 5 of the lw of vanale proportions which are explainedi Thin stage (Stage ot negate a Bsoszeseaass Basal on the above table and schedule thee sage of prucon can be ing eur: In his sta, TP eases atthe ae TP is contincly crasing. AP i alo continously decreasing fu never ones oe e toe go ua 07 nt, buh AP and MP are declining unto bow hi prot A produce isin am when he ‘oat A racinut when fe aT re quia iter ining costi of a ae tens cept canbe pura te gemcnorouly = k= EB yan ee. 09 Wea S20 2 nis Hee 8,0) | ‘TMi esos cost ine AB, whichisas follows 12 owing tre production preference schedules: easel stint $a — Comte KL Oa Conia KT Oa Gone na tore tone shown vo tpt ae BD ‘Ash in hon hes ot combat fo pa 8D fad G respectively. However, gien the oul oul cninabns optimal combat. Is the igh Oe ee eee eee ‘equilibrium point as show inthe folowing igure.