BEO1105 ASSIGNMENT

BEO1105 ASSIGNMENT

Subject: Economics    / Accounting
Question
QUESTION 1
Explain, with the use of demand and supply diagrams, the effect of the following events on
the market for solar panels. (Assume ceteris paribus for each of the event).
(a) The price of solar panels has fallen to below the market equilibrium price.
(b) The price of electricity for an average household has increased by 50 percent.
(c) New technology has increased the productivity of solar panel producers.
NOTE: EXPLAIN THE MARKET EQUILIBRIUM ADJUSTMENT PROCESS IN YOUR
ANSWERS.
2 + 2 + 2 = 6 Marks
QUESTION 2
Ceteris paribus, an increase in the demand for yoga services has occurred at the same time
when the number of yoga service providers has decreased due to stricter government
regulations. Using demand and supply analysis, explain the impact on price and quantity in
the market for yoga services?
(HINT: THERE ARE 2 FACTORS WORKING AT THE SAME TIME)
5 Marks
QUESTION 3
Recently, due to the discovery of bird flu, the Swedish government ordered the culling of a
few hundred thousand chickens. This was accompanied, at the same time, by a fall in
demand for live chickens. Using demand and supply analysis, explain the impact on price
and quantity in the market for live chickens?
(HINT: THERE ARE 2 FACTORS WORKING AT THE SAME TIME)
5 Marks
QUESTION 4
Assume the price of a good increase from $6 to $8, leading to a fall in quantity demanded
from 50 to 40 units. Using the midpoint elasticity formula, calculate the price elasticity of
demand for the good at this price range. Explain why it is important for a business to
estimate the price elasticity of demand for its product.
4 Marks
QUESTION 5
Assume, in an industry where firms are making an economic profit, the creation of an
internet platform has broken down all entry barriers and resulted in a huge increase in the
number of firms entering the industry. What will be the implication on profit to the existing
firms in this industry? Use graphical demand and supply analysis to support your
explanation.
5 Marks
Jesse Singh (December 2016).