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ECO401 Assignment No 1 Solution Spring 2022

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ECO401 Assignment No 1 Solution Spring 2022

Question no 1 Solution:

ππ = 75 β 20π + 2π power 2

π = 4

(πππππ ππ πππππππ  )ππ (ππ’πππ‘ππ‘π¦ π·πππππ) ππ’π‘π‘πππ π ππππ’π ππ πΈππ’ππ‘πππ πππ€. a) Calculate price elasticity of demand when price is 4 dollars. Also, interpret theresult.

ππ = 75 β 20(4) + 2(4)power 2

ππ = 75 β 80 + 32

ππ =27

b) Calculate total revenue of the industry by using above information in part (a).

πππ‘ππ πππ£πππ’π = π

π€βππβ ππ  πππ’ππ π‘π

π = π Γ π

= 4 Γ 27

=108

c) If price elasticity of demand of ViraBloc becomes – 15/14 then how this will affect the price of ViraBloc?

ππππππ ππ πππππ΅πππ ππππππ β 15 14 πππ£πππ πππ‘β π€βππβ ππ  πππ’ππ π‘π β 1.0714

As we know that when the answer lie in center it’s called unitary if the answer is going in positive its called Elastic if the answer is less than one mean in minus its mean it’s going in negative it’s called in elastic. So the nature of the Virabloc is in elastic and in elastics the Increase the price as much as you like, quantity demanded almost the same.