Assignment BIE ECON 301 Complete Solution

Question: #7384

UNIVERSITY OF MODERN SCIENCES
College of Business
SUMMER-II 2014-15

Assignment BIE-ECON 301
Course Name: Business and Industrial Economics   Course Code: ECON 301
Assessment:    ASSIGNMENT BIE- ECON 301   Submission Date: August 29, 2015
Student Name:
-----------------------------------------------------------------   Student ID:
----------------------------Section {             }
Total Marks: 50   Weightage: 20%
Course Learning Outcomes (CLOs) Coverage:
CLOs   K1   K2   C1
Max Marks   15   15   10
Awarded

INSTRUCTIONS TO THE CANDIDATES:
   This is individual assessment. Group work is not allowed.
   In mentioned cases provide a neat diagram to explain your answer. Make sure to label axes properly. Else points will be deducted
   PLEASE SUBMIT the Assignment through STUDENT PORTAL
   Assignments submitted through Student Portal will be marked ONLY
   The Assignments submitted after DUE DATE will not be ENTERTAINED
Question-1: Suppose that you have been hired as an Economic Researcher by OPEC and given the following schedule showing the world demand and supply for oil:
(5 marks)
Price (P) ($/barrel)   Quantity Demanded (Qd)
(millions of barrels/day)   Quantity Supplied (QS)
(millions of barrels/day)
10   60   20
20   50   30
30   40   40
40   30   50
50   20   60
Answer the following questions:
a.   At what price, the oil market will be in equilibrium situation?
b.   If OPEC produces 50 million of barrels/day, calculate its Total Revenue (TR)?
c.   If the price of oil rises from $40 to $50 per barrel, what will be the Total Revenue (TR) from oil sales? Also mention either TR will increase or decrease?
d.   When the price changes from $30/barrel to $40/barrel, calculate Price Elasticity of Demand (Ed)?
e.   When the price changes from $30/barrel to $40/barrel, calculate Price Elasticity of Supply (Es)?

Question-2: Define the Law of Supply? Keeping in view the Law of Supply, how the following factors will shift the supply curve? (Each answer must be supported by a neat diagram):                                                                                               (2 + 8 = 10 marks)

a.   If costs of raw material increases in the plastics industry;
b.   If new technology is introduced in the automobile manufacturing;
c.   If OPEC decides to reduce oil prices in the Gulf Region;
d.   If government introduces some new taxes in the construction sector.

Question-3: Define and explain ‘Law of Diminishing Returns with the help of diagram. What are the different stages of production in the short run?
(5+5 =10 marks)

Question-4: Define and explain ‘Price Discrimination (PD)’ with the help of diagram. Also give examples of Price Discrimination from the real world?
(5+5 = 10 marks)

Question-5: (2+2+2+2+2+2+3 = 15 marks)
Suppose the quantity demanded of good (Qd) depends only on the price of the good (P), monthly income (M), and the price of a related good R (PR):

a.   Construct the demand curve for the good when M = $1,000 and PR = $5. The equation for demand is
Qd = ________________________
b.   Interpret the intercept and slope parameters for the demand equation in part a.
c.   Let income decrease to $950. Construct the new demand curve. This good is _____________________ (normal, inferior). Explain using your graph.
d.   For the demand curve in part c, find the inverse demand function:
P = _____________________.
e.   Let the price of good R increase to $6 (income remaining at $950). Construct the new demand curve. Good R is a _______________________ (substitute, complement) good. Explain using your graph.
f.   For the demand curve in part e, find the equilibrium price and quantity when supply function is as under;

PE = ____________   and   QE = ____________

g. Construct the supply curve and verify your answer by showing equilibrium price and equilibrium quantity graphically.

Good Luck!

Solution: #7392

Assignment BIE-ECON 301 Complete Solution

Q1 Ans1) $30 Ans 2) $1200 Ans3) $1000 , Decrease Ans4) $33.8...