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Internal Homework Question

The document examines the relationship between price elasticity of demand and consumer behavior across various food categories, highlighting specific elasticities for candy, processed snacks, organic products, and whole grains. It also includes a demand function for a product, requests for equilibrium price and quantity calculations in a market scenario, and discusses the effects of government policies on demand and supply in the education sector. Additionally, it addresses the implications of wage rate increases on short-run production costs.

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reachashish413
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4 views2 pages

Internal Homework Question

The document examines the relationship between price elasticity of demand and consumer behavior across various food categories, highlighting specific elasticities for candy, processed snacks, organic products, and whole grains. It also includes a demand function for a product, requests for equilibrium price and quantity calculations in a market scenario, and discusses the effects of government policies on demand and supply in the education sector. Additionally, it addresses the implications of wage rate increases on short-run production costs.

Uploaded by

reachashish413
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Q1. Suppose you are examining the relationship between price and consumer behavior.

Your
goal is to evaluate how the price elasticity of demand affects the consumption choices of various
food groups. The following table presents the price elasticity of demand for different food items:
Table 1: Price Elasticity of Demand for Various Food Categories

Food Category Price Elasticity of Demand

Candy 0.85

Processed Snacks 0.78

Organic Product 0.30

Whole Grains 0.25

Q2. Consider a market where the demand function for a particular product is given by the
100−𝑃
equation 𝑄 = , where P represents the price and Q represents the quantity demanded.
2
Find the inverse demand function.

Q3. Give example of short run and long run cost of the firm. What happens when the wage rate
increases in a scenario of short run production function?

Q4. The market supply and demand functions for a product of a Malaysian firm are given by
Q = 100 + 20P
Q = 300 – 5P
Where Q is the quantity in thousand ('000 units) and P is the price (in RM '000)
a. Find the equilibrium price and output.
b. When the government imposes 20% Sales Services Tax (SST) to the consumers, estimate
the after-tax quantity demanded
c. Estimate the price elasticities of demand and supply at the equilibrium price and quantity.
Q5. Suppose we are analyzing the market for the local education provider. Study the impact each
of the following would have on demand and supply. Explain how the equilibrium price and
equilibrium quantity would change.

i. The government increases the number of scholarships for studying abroad and
potential students are keen to study abroad.

ii. Increase in the number of a private institution that offers a range of programs and
number of qualified students fall.

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