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# ASSIGNMENT NO. 01 For ECONOMICS (ECO401) SEMESTER FALL 2013 (DUE DATE: 1ST DECEMBER, 2013)

SEMESTER FALL 2013
ECONOMICS (ECO401)
ASSIGNMENT NO. 01
DUE DATE: 1ST DECEMBER, 2013
MARKS: 20
ASSIGNMENT:
CASE 01:
The local sports goods manufacturing industry is one of the major source of foreign
exchange earnings of Pakistan. At present, there are more than 2000 units of sports
goods, mostly on small scale in operation, with an installed capacity of Rs.20 billion per
annum. These units are operating on single-shift basis. However, due to increased
competition globally, the industry can no longer enjoy the profit; it did in the region
earlier. But in Pakistan, due to shortage of electricity and high research and development
cost, price of sports goods remained at very high level. What will be the effect on the
equilibrium situation of sports goods industry if cost of production of sports goods
increases due to high per unit cost of electricity. Illustrate graphically.
(Marks: 6)
CASE 02:
Pakistan is an agrarian economy. Fertility of its land allows producing multiple products.
In a number of farms of Punjab, producers are able to switch back and forth between rice
and wheat production depending on market conditions. Similarly, consumers tend to
regard wheat and rice as substitutes. As a result, the demand and supply of rice is highly
sensitive to change in both rice and wheat prices. Quantity demanded and quantity
supplied equations for rice is as follows:
QD=2000-28P
QS=-2020+85P
a) Calculate the market equilibrium level of output and price.
b) If P = Rs.50 then how much amount of shortage or surplus would occur?
(Marks: 6+3)
CASE 03:
K&Ns is a leading brand for meat production. It has generated influential number of sales
and revenues from its launching of different products. In year 2010, it has planned to
enhance its sales up to Rs.65, 000 million from Rs.59, 000 million. It hired an economic
increase its advertisement expenditures from Rs.9, 200 to Rs.10, 000. Management of
sales for meat. Calculate the average advertising arc elasticity of demand for K&Ns.
(Marks: 5)

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### Replies to This Discussion

Case 2:

Qd = Qs

2000 - 28 p = -2020 + 85 p

28 p + 85 p = 2000 + 2020

113 p = 4020

p = 35.57

Secondly if price Rs.0.50

Then:

Qd = 2000 - 28 p

= 2000 - 14 = 1986

Qs = -2020 + 85 p

= -2020 + 42.50 = -1977.50

At the price of 0.50, equlibrium will out and shortage wil create

kya ye correct solution hai ???

nhe khalt ha ya

+Abbas Niazi: Proper samjahu... ya galt nahi nahi... bs rs main .50 nahi balki 50 ayea ga... wo b misunderstanding ki waja sa... main na 0.50 samjha th...

bhi jan wo dot Rs k bad ha price 50 ha

Bro baki thek hi hai... bs .50 ki jaga 50 likho... itna tu ap kar sakte ho na...??

naqvi bhi sorry if you mind  very good work indeed bhi carry on

plz tell how to make graph i  need help

case 2:
Qd = Qs
2000 - 28 p = -2020 + 85 p
28 p + 85 p = 2000 + 2020
113 p = 4020
p = 35.575221
after the calculatin pirce P=35.57 the pirce35.57 will be added in bhot equation QD & QS
the formate is
QD=2000-28P
= 2000-28*35.575221
= 2000-996.10619
QD= 1003.8938

then we add the P=35.57 in QS
QS=-2020+28p
= -2020+85*35.575221
= -2020+3023.8938
QS= 1003.8938
then
Secondly if price Rs.50
p=50
Then:
Qd = 2000 - 28 p
= 2000 - 28*50
= 2000-1400 =600
Qs = -2020 + 85 p
= -2020 +85*50
= -2020+4250
= 2230

bhai point k bad maxium 4 digit lekhty hen, sary lekhny ki zarort nai. and thank baki 1 dam correct hy

coract anser  dear if price 0.50 ni 50 ha

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