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Assignment # 1

This document outlines an assignment on economic issues and policies with three questions. [1] The first question provides demand and supply equations for t-shirts and asks to calculate the original equilibrium price and quantity. [2] The second question provides two possible new demand curves in the event that demand decreases, and asks to calculate the new equilibrium for one selected curve. [3] The third question provides two possible new supply curves if two new stores open, and asks to calculate the new equilibrium for one selected curve.

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Bilal Rizwan
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143 views

Assignment # 1

This document outlines an assignment on economic issues and policies with three questions. [1] The first question provides demand and supply equations for t-shirts and asks to calculate the original equilibrium price and quantity. [2] The second question provides two possible new demand curves in the event that demand decreases, and asks to calculate the new equilibrium for one selected curve. [3] The third question provides two possible new supply curves if two new stores open, and asks to calculate the new equilibrium for one selected curve.

Uploaded by

Bilal Rizwan
Copyright
© © All Rights Reserved
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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ASSIGNMENT # 1

Economic Issues and Policies in Global Perspective


MBA (G)
Total marks=10

Announced Date: 3/3/2020 Submission date: 10/3/2020


Q#2 The demand and supply curves for T-shirts in Lahore are given by the
following equations:
Qd = 24,000 – 500P
Qs = 6,000 + 1,000P

Where P is the price in rupee and Q is the number T-shirts sold per year.

a. Find the equilibrium price and quantity.


b. If boys decide they do not really like T-shirts that much, which of the
following might be the new demand curve?

Qd= 21,00 – 500P Qd = 27,000 – 500p

And find the new equilibrium price and quantity

c. If instead, two new stores that sell T-shirts open up in town, which of the
following might be the new supply curve?

Qs = 3,000 + 1,000P Qs =9,000 + 1,000P

Find the new equilibrium price and quantity after the shift in the supply
curve.
(3)
Solution

a.
Qd=Qs

24,000 – 500P=6,000 + 1,000P


24000 – 500P – 6000 - 1000P
18000-1500P
P=18000/1500
P=12

Qd = 24,000 – 500(12)=18,000
Qs = 6,000 + 1,000(12)=18,000

b. Qd= 21,00 – 500P Qd = 27,000 – 500p


Qd1= 21,00 – 500(12)= -3900
Qd2 = 27,000 – 500(12)= 21000
I think Qd2 will be new demand

Qd2=27000-500P
Qs=6000+1000P

27000-500P=6000+1000P
27000-500P-6000-1000P
P=21000/-1500= -14

Qd=27000-500(-14)= -20,000
Qs=6000+1000(-14)= -20,000

c. Qs = 3,000 + 1,000P Qs =9,000 + 1,000P


Qs1=3000+1000(14)=17000
Qs2=9000+1000(14)=23000

Qs1=3000+1000p
Qd=24,000 – 500P
24000-500p-3000-1000p
21000-1500p
P=21,000/1500
P=14

Qse=3000+1000(14)=17,000
Qde=24000-500(14)=17000

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