microeconomics 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 Microeconomics Assignment

Help deals with the effects of nations 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 Assignment Sample Questions and Answers:

Question 1: What is price elasticity of demand for life saving drugs?

Solution :

Life saving drugs are essentials .To a change in their price there can be no change in the

quantity demanded .That is eD = 0 . Life saving drugs has a perfectly in elastic demand.

Question 2: A decline in the price of good Y by $5 causes an increase of 20 units on its

demand which goes up to 580 units. The new price is $15. Calculate eD.

Solution :

= $5 = 20

P1 = $15 Q1 = 50 units

P = $20 Q = 30 units

eD =

.

=

20

5 .

20

30 =

40

15 = 2.6

Good Y has an elastic demand.


Question 3: What will be the value of elasticity of demand if the demand curve is a

horizontal line parallel to x-axis?

Solution :

This is a case of perfectly elastic demand ,

eD = . In this situation, percentage change in quantity demanded is infinity at a price.

Alternative Solution : On a horizontal demand curve, slope (i.e,

) is zero.

eD = 1

Slop .

=

1

zero .

=

1

0 = .

Px

eD = d

Qx

O


Question 4: Determine price elasticity of demand using percentage method.

Solution :

Outlay means expenditure which is price multiplied by quantity demanded. Thus, by dividing

total outlay by quantity, price figures can be obtained as follows.

And Q = 20 units

and P x Q = $100

P = x

=

100

20 = $5

Similarly Q1 = 30 units

And P1 Q1 = $120

Quantity Total Outlay ($)

20

30

100

120


P1 = 1 x 1

=

100

30 = $4

Rearranging P = $5

P1 = $4

= $1

Percentage change in price =

x 100 =

1

5 x 100 = 20%

Also,

Q = 20 unints

Q1 = 30 units

= 10 units

Percentage change in quantity =

x 100 =

10

20 x 100 = 50%

eD = Percentage change in quantity demanded

Percentage change in price

eD = 50%

20% = 2.5


Question 5: As the price of a product decrease by 7%, the total expenditure on it gone up

by 3.5%. What can we say about the elasticity of demand for this product?

Solution :

Since with fall in price, total expenditure rises, it is a case of elastic demand, i.e., eD > 1.

Question 6: The price of cauliflower goes up by 8% and the total expenditure by a family

on cauliflower goes up by 8%. What can we say about the elasticity of demand for

cauliflower by this family?

Solution :

Since with rise in price, total expenditure also rises it is a case of inelastic demand, i.e., eD < 1.

Question 7: A dentist was charging $300 for a standard cleaning job and per month it used

to generate total revenue equal to $30,000. She has since last month increase the price of

dental cleaning to $350. As a result, fewer customers are now coning for dental cleaning,

but the total revenue is now $33,250. From this, what can we conclude about the elasticity

of demand for such a dental service?


Solution :

Given,

P = $300, Total revenue (P x Q) = $30,000

P1 = $350, Total revenue (P1 x Q1) = $32,000

Therefore, when P = $300, Q =

=

30,000

300 = 100

and when P1 = $350, Q1 = 1 1

1 =

32,250

350 = 95

eD =

x

=

5

50 x

300

100 =

3

100 = 0.3

Thus, demand for dental service is inelastic since eD is less than one.

microeconomics assignment help

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