Blog: Eco401 Assginment No. 1

Semester “Fall 2010”
“Economics (ECO401)”
Assignment No.01 Marks: 15

Question:

Suppose the market demand and market supply for coffee is given by the following equations:

Qd = 850 – 15P
Qs = 400 + 30P

A. Find quantity demanded and quantity supplied when the price of coffee is Rs. 8. Is there a surplus or shortage in the production of coffee? What should happen to the price of coffee?

B. Find the equilibrium price for coffee by using given demand and supply equations.

C. Prove that the price found in part (B) is an equilibrium price.

D. Show the equilibrium condition in coffee market graphically.

Marks: A = 6(4+1+1), B = 2, C = 3, D = 4

Important Note: