1.
Tullassa can produce two types of good: wooden furniture and olive oil. Tullassa has a
limited amount of land, labour and capital.
(a) Draw a PPC diagram to show the impact of following events on the productive capacity.
(b) There has been advancement in technology in Tullassa, which means that yields of olive oil
and the productivity of furniture makers have increased using PPC diagram.
(c) A powerful storm hits Tullassa and destroys a large percentage of the factories and
buildings using PPC diagram.
2.
Using an appropriate demand diagram, explain the impact on the demand for Apple
smartphones in the following cases:
(a) An increase in the price of Apple smartphones.
(b) An increase in the price of Samsung smartphones.
(c) An increase in consumer incomes.
(d) A successful advertising campaign promoting Samsung's latest smartphones.
3.
Using an appropriate supply diagram, explain the impact on the supply of educational
computer games in the following cases:
(a) The government provides subsidies for the purchase of educational computer games.
(b) There is an increase in the rate of commission paid to creators and the fee paid to
distributors of educational computer games.
(c) The government introduces a 15 per cent sales tax on all computer games.
(d) There are technological advances in the production of educational computer games.
4.
Using an appropriate demand and supply diagram, explain the impact on the market price
and quantity traded in each of the following cases:
(a) The market for air travel following the imposition of higher fuel taxes.
(b) The market for Pepsi Cola following a fall in the price of Coca-Cola.
(c) The market for sushi following a successful marketing campaign promoting the health
benefits from eating rice and raw fish.
(d) The market for Samsung digital cameras following new technologies that improve
productivity in its factories.
5.
Matching Test:
Match I
A. Demand curve slopes
B. In case of Giffen goods, demand curve
slopes
C. Expansion of demand curve is due to
D. Increase in demand curve is due to
6.
Match II
i. Decrease in price of the good only
ii. Decrease in other than the price of good
iii. Upward to the right
iv. Downward to the right
Fill up the following utility from the given table.
Units of X
1
2
3
4
5
TU
50
90
140
155
MU
50
30
-
7.
The demand for a goods falls to 500 units in response to rise in price by Rs. 10. If the original
demand was 600 units at the price of Rs. 30, calculate price elasticity of demand.
8.
Calculate the income elasticity of demand from the following data (use the arc Method).
Income
Quantity Demanded
$ 15,000
20,000
$ 20,000
30,000
9. Find elasticity of supply by using arc method if price of rice rises from Rs. 5 to Rs. 10 per kg and
supply increases from 10 kg to 15 kg in a month.
10.
Draw the market supply and demand schedules of a certain commodity at prices of Rs.8, 7,
6,5,4,3,2,1, and 0 are given by the equation
Qd = - 3P + 24
QS = 2P + 4
(a) Find out the equilibrium quantity and price by using graph.
(b) Which price the excess demand and excess supply will appear?
(c)
11.
Fill up the following costs from the given table.
Units
1
2
3
4
5
TFC
100
TVC
50
TC
MC
AFC
AVC
ATC
40
30
270
70