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# ECONOMICS (ECO401) Assignment#1 Fall 2017

DUE DATE: NOVEMBER 20, 2017

MARKS: 10

ASSIGNMENT: The Case: Tomato is second most popular vegetable after potato with 124.75 million tons of production. It is a necessary part of diet because it is useful in raw form as well as in cooked form. Tomato is a main source of vitamin A, B and C with 20% share in daily usage, and it also provides other nutritional elements like potassium, calcium, fiber and iron. Presence of Lycopene made it useful against cancer. In Pakistan, monthly per capita tomato consumption was 0.39 kg and 0.42 kg for rural and urban people, respectively. In recent month, the price of tomato showed a spike due to several reasons such as reduction in import from India and less production in Pakistan.

Suppose the demand and initial supply equations of tomato are given as follows:

Qs = 34 + 0.25P

Qd =88 – 0.05P

Due to the above mentioned supply shock (reduction in import from India and less production in Pakistan), the supply equation changed as follows:

Qs = 22 +0.25P

Requirement:

a) Find the equilibrium quantity and equilibrium price of tomato before supply change.

b) Find the equilibrium quantity and equilibrium price of tomato after supply change.

c) If the price announced by market committee is P = Rs. 140 per kg then how much amount of shortage or surplus would occur after the supply shock? Marks: (4+4+2)

I hope that students of ECO 401 will help out each other

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# ECO401 - Economics Assignment No. 1 Solution and Discussion Fall 2017 Due Date: November 20, 2017

ECO401 Assignment#01 Idea Solution

Attachments:

Assignment NO.1

Eco401

Q1.

Qs = 34 + 0.25P

Qd =88 – 0.05P

Qd=Qs

88-0.05p=34+0.25p

88-34=0.25p+0.05p

54=0.3p

P=54/0.3=180

Put the price in Demand or Supply

Qd =88 – 0.05P or Qs = 34 + 0.25P

Q=88-0.05(180) or Q=34+0.25(180)

Q=88-9=79 or Q= 79

Q= 79

The equilibrium price is 180 and the equilibrium quantity is 79

Q2.

Qs = 22 +0.25P

Qd =88 – 0.05P

Qd=Qs

88-0.05p=22+0.25p

88-22=0.25p+0.05p

66=0.3p

P=66/0.3=220

Put the price in Demand or Supply

Qd =88 – 0.05P or Qs = 22 +0.25P

Q=88-0.05(220) or Q=22+0.25(220)

Q=77 or Q=77

Q=77

The equilibrium price is 220 and the equilibrium quantity is 77

Q3.

Qs = 22 +0.25P

Qd =88 – 0.05P

P=140

Qd =88 – 0.05P

Qd =88 – 0.05(140)

Qd=81

Qs = 22 +0.25P

Qs=22+0.25(140)

Qs=57

This is a shortage because demand exceeds supply producers are unable to meet market Demand for the product. Shortages cause prices to raise prompting producers to produce more and consumers to demand less.

Note: if you found any mistake then correct ur self I m not responsible in case of zero marks

ECO401 Assignment#01 Solution idea

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Thank You...!

sir yah answer ok hy ?

Thanks a lot Dear Sir Tariq for helping us.....You are sooo sweet

haider malik thanks & welcome :-)

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