TASK – GROUP ASSIGNMENT.
1. Explain elasticity of demand and elasticity of supply
a) Explain types of elasticity of demand and supply on: -
(i). Price elasticity; (ii). Income elasticity; (iii). Cross elasticity
b) Provide example on elasticity of demand on changes of the followings: -
i. Draw diagrams to indicates different types of elasticity of demand and
supply
ii. Provide example of calculated opportunity cost.
iii. Explain exceptional to law of supply.
iv. Explain uses of elasticity of demand
2. Given the following function P= 20 – 0.1 Qd and P = 5 + 0.05Qs Find: -
i. equilibrium price;
ii. equilibrium quantity and draw it diagrams
3. B WOODWORK account department has determined that fixed costs of TZS 10,000,000 and
variable cost of TZS 700,000 are incurred to procure 20 beds per week;
i. Write the total cost function and determine the total costs of production.
ii. Calculate total revenue if 90 percent of beds are sold at TZS 1,500,000 per bed
iii. Calculate total profit using information in part (a) and (b) above.
4. Martine used to buy 50 units of a certain commodity per month when its price was TZS
6,000 per unit but currently, he buys 45 units per week because price has increased by 75
percent.
i. Find new price
ii. Calculate price elasticity of demand
iii. Interpret your answer in (ii) above
5. Given the demand function Qd = 90,000 – 600P and the supply function; Qs = 600P
a) Calculate the equilibrium price and equilibrium quantity
i. Given that the government has impose a tax of Tsh. 20 per unit supplied
b) Calculate new equilibrium price and equilibrium quantity
c) Calculate the total tax revenue
6. Suppose the firm demand function is given by Q = 50 + 0.5 Y, where Y id the consdumer’s
income. Calucluate the income elasticity of demand when the consumer’s income is Tsh
50,000 per week.
7. A firm produces a single product with the following cost and revenue functions;
Total Cost: TC (Q) = 100 + 10Q +Q2
Total Revenue: TR (Q) = 50Q
Where Q is the quantity of output produced.
a) Find quantity Q that maximizes the firm’s profit.
b) Calculate the maximum profit.
8. (a) Suppose the price of a good increases from Tsh 20 to Tsh 25 and as a result the
quantity supplied increases ffrom 50 units to 70 units. Calculate Elasticisty of supply.
(b) Suppose the price pf a product increase from Tsh. 10 to Tsh 12, resulting the quantity
demanded to decrease from 100 units to 80 units. Calculate the price elasticity of
demand.
9. Find the equilibrium level of national income (In million US$) if;
Consumption expenditure © = 2,000 +0.8 Y
Investment expenditure (I) = 900
Government spending (G) = 300
10. A firm’s sales department has determined that total cost function is given by
TC = 4805 + 40 Q + 5Q2.
From the above information; find: -
a) The average variable cost function
b) The marginal cost function
c) The production level that will minimize the average total cost (ATC)
d) Total profit if the market price is P = 1000 -10Q and ATC is minimum.