Scribd
Upload
25 views2 pages

Assignment: 480-40P - 240+40P 480+240 40P+40P 720 80P P 720/80 P 9

The document discusses economic principles and answers two questions related to supply and demand. The first question calculates the equilibrium price and quantity when supply and demand are equal. The second question calculates the price elasticity of demand for business travelers and vacationers.

Uploaded by

Nabeel Ahmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
25 views2 pages

Assignment: 480-40P - 240+40P 480+240 40P+40P 720 80P P 720/80 P 9

The document discusses economic principles and answers two questions related to supply and demand. The first question calculates the equilibrium price and quantity when supply and demand are equal. The second question calculates the price elasticity of demand for business travelers and vacationers.

Uploaded by

Nabeel Ahmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

PRINCIPLES OF ECONOMICS 

  

Assignment

Q1.
Ans.
Qd = 480-40P
Qs= -240+40P
So, in equilibrium , Qd=Qs
480-40P = -240+40P
480+240 = 40P+40P
720 = 80P
P = 720/80
P=9
So, Qd = Qs
When, P = 9
Qd = 480-40P Qs = -240+40P
Putting the value of (P); Putting the value of (P);
Qd = 480-40(9) Qs = -240+40(9)
Qd = 480-360 Qs = -240+360
Qd = 120 Qs = 120
Price = 9 And Quantity = 120
So, Equilibrium price is 9 and Quantity is 120

Q2.
Ans.
Price elasticity of Demand for Business Travelers:
Q1 = 2000 , Q2 = 1800
P1 = 200 , P2 = 300
Use in Midpoint formula:
= Q2-Q1/{(Q1+Q2)}/2*100/
P2-P1/{(P1+P2)}/2*100
= 1800-2000/{(2000+1800)}/2*100/
300-200/{(200+300)}/2*100
= -200/(3800)/2*100/
100/(500)/2*100
= -200/1900/100/250
= -0.105/0.4
= -0.26
So, ignore the negative sign.
Elasticity of Business Traveler = 0.26
Price elasticity of Demand for Vacationers:
Q1 = 800 , Q2 = 400
P1 = 200 , P2 = 300
Use in Midpoint formula:
= Q2-Q1/{(Q1+Q2)}/2*100/
P2-P1/{(P1+P2)}/2*100
= 400-800/{(800+400)}/2*100/
300-200/{(200+300)}/2*100
= -400/(1200)/2*100/
100/(500)/2*100
= -400/600/100/250
= -0.668/0.4
= -1.67
So, ignore the negative sign.
Elasticity of Vacationers = 1.67

You might also like