Micro Economics Homework Help Micro Economics Assignment Help
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About Micro Economics: The term Micro Economics is derived from the Greek word “mikro- meaning "small. It is studied as a part of the Economic Study. As against the macroeconomic study which consists of studying the economic activities in totality Micro Economics Homework Help deals with the effects of nation’s economic policy on of growth, inflation, and unemployment etc. One of the most significant aspects of micro economics study is to analyze the market mechanisms that create and establish the relative prices among the products and services. It also analyses the means of allocating the scarce resources among the available alternatives.
Why Choose Us? Accuracy: We are a company employed with highly qualified Economics experts to ensure fast and accurate homework solutions aimed at any difficult homework – both Micro economics and Macro economics. Micro Economics Homework Sample Questions and Answers: Question 1. A 20% fall in the price of sugar leads to 25% rise in its demand. Calculate the price elasticity of demand. Comment on the commodity. Solution: eD = Percentage change in quantity demanded Percentage change in price Thus,
eD =
25% 20%
= 1.25
Sugar has an elastic demand as its coefficient of elasticity of demand is greater than one. Sugar is a luxury for this household.
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Question 2. When the price of wheat goes up by 10% its demand falls from 800 Units to 600 units .Calculate price elasticity of demand. Will the demand curve for wheat be flatter or steeper? Solution: Given, Original quantity (Q) = 800 units New quantity (Q) =600 units Change in quantity(∆Q) = 200 units Percentage change in quantity =
∆đ?‘„ đ?‘„
200
X100 =800 X 100=25%
eD = Percentage change in quantity demanded Percentage change in price
eD =
25% 10%
= 2.25
Wheat has an elastic demand .it is a luxury for this household. The demand curve for wheat will be flatter showing more than proportionate change in quantity demanded to a change in price.
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Question. 3. What is the relationship between slope and elasticity of a demand curve? Solution: The formula of elasticity of demand is
eD
=
∆đ?‘„ đ?‘ƒ ∆đ?‘ƒ
.đ?‘„
Formula of slope of demand curve is: Slope =
∆đ?‘ƒ ∆đ?‘„
The relationship between slope and elasticity of a demand curve is eD
=
đ?&#x;? đ??’đ??Ľđ??¨đ??Š
.
� �
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Question.4. A consumer spends $40 on a good at a price of $1 per units and $60 at a price of $2 per unit. What is the price elasticity of demand? What kind of good it is? What shape its demand curve will take? Solution: Given, Original price (P) = $1 New price (P1)
= $2
Change in price (AP) = $1 From the expenditure (P Ă— đ?‘„) figures of $40 and $60, quantity demanded figures can be calculated as follows: Original quantity demanded (Q) =
đ?‘ƒđ?‘‹đ?‘„ đ?‘ƒ
đ?‘ƒ1đ?‘‹đ?‘„1
New quantity demanded (Q1) =
đ?‘ƒ1
=
$40
=
$1 $60 $2
40 units = 30 units
Change in quantity (AQ) = 10 units.
eD
=
∆đ?‘ƒ ∆đ?‘„
.
đ?‘ƒ đ?‘„
=
10 1
.
1 40
=
1 4
= 0.25
The good has an inelastic demand .It is a necessity like food, fuel etc. The demand curve for this good is steep.
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Question.5. Price of rice falls from $5 to $4 per kg. This leads to an increase in its demand from 10 kg to 20 kg in a month. Comment on its elasticity of demand. Solution :
Given,
P = $5
Q = 10 kg
P1
Q1 = 20 kg
= $4
∆đ?‘ƒ = $1
∆ đ?‘„ = 10 kg eD
=
∆đ?‘„ ∆đ?‘ƒ
.
� �
=
10 1
5
.10 = 5
Rice has an elastic demand and is a luxury for this household.
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