Practise sheet for micro economics
3
7-Sep-12 Ansal University Business Economics I Worksheet 1 Faculty: Dr. Meenal Sharma Jagtap Q1. Find the consumer’s equilibrium from the following table. Money income is Rs. 50 & the MU of money is constant at Re 1 = 5 units.Price per unit of X is Rs. 5 & per unit of Y is Rs. 4 Units of commodity Marginal Utility of X Marginal utility of Y 1 50 36 2 45 32 3 40 28 4 35 24 5 30 20 6 25 16 7 20 12 8 15 8 Q2. Two goods have a cross price elasticity of demand +1.2 would you describe the goods as substitutes or complements? If the price of one of the goods rises by 5%, what will happen to the demand for other good, holding other factors constant?
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Transcript of Practise sheet for micro economics
7-Sep-12
Ansal UniversityBusiness Economics I
Worksheet 1 Faculty: Dr. Meenal Sharma Jagtap
Q1. Find the consumer’s equilibrium from the following table. Money income is Rs. 50 & the MU of money is constant at Re 1 = 5 units.Price per unit of X is Rs. 5 & per unit of Y is Rs. 4
Units of commodity Marginal Utility of X Marginal utility of Y
1 50 36
2 45 32
3 40 28
4 35 24
5 30 20
6 25 16
7 20 12
8 15 8
Q2. Two goods have a cross price elasticity of demand +1.2 would you describe the goods as substitutes or complements? If the price of one of the goods rises by 5%, what will happen to the demand for other good, holding other factors constant?
Q3. How would you measure point price elasticity of demand at a point on a demand curve?
Q4.Colgate sells its standard toothpaste for Rs. 25. Its sales have been on an average 8000 units per month over the past year. Recently, its close competitor Pepsodent reduced the price of its standard toothpaste from 35 to 30.As a result, Colgate sales declined by 1500 per month. Find cross price elasticity between the two products.
Q5. Explain the importance of cross price elasticity in formulating proper price strategy by a firm.
7-Sep-12
Q6.What is meant by the market demand curve? Obtain the market demand curve from the data given below:
Price(Rs.) 10 8 6 4 3
Qty demanded by Consumer A
20 30 50 100 120
By Consumer B 15 25 60 150 270
By Consumer C 10 20 80 190 410
Calculate price elasticity of demand for each market segment when price falls from 10 to 6? Also calculate price elasticity of market demand for same change in price.
Q7. State the assumptions of the Law of Diminishing Marginal Utility.
Q8.Why do you think Ordinal utility analysis is superior to Cardinal utility analysis.
Q9. Distinguish between Increase in Demand Vs Extension in demand and Decrease in Demand Vs. Contraction in demand with help of appropriate diagrams.
Q10. Make a poster to illustrate the process of evolution of economic thought with special emphasis to the concept of ‘Division of Labor’ given by Adam Smith.
