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:
�� Calculate to the point where calculation is being required. NO need to write irrelevant material or extra interpretation.
�� Draw equilibrium condition in coffee market by yourself. Do NOT copy from any source. NO need to write irrelevant material.
�� Graphs are very important in Economics course. This assignment will enhance your skill of drawing graphs. A complete procedure of “How to draw graphs in MS-Word” is uploaded on announcement page of LMS. Get help from that uploaded file to solve part D of this assignment.

Important Tips:
1. This Assignment can be best attempted from the knowledge acquired after watching video lecture no. 1 to lecture no 10 and reading handouts as well as recommended text book.
2. Video lectures can be downloaded for free from www.youtube.com/vu.

Schedule
Opening Date and Time October 26, 2010 At 12:01 A.M. (Mid-Night)
Due Date and Time November 01, 2010 At 11:59 P.M. (Mid-Night)

Note: Only in the case of Assignment, 24 Hrs extra / grace period after the above mentioned due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.

Important Instructions:
Please read the following instructions carefully before attempting the assignment solution.
Deadline:
• Make sure that you upload the solution file before the due date. No
assignment will be accepted through e-mail once the solution has been
uploaded by the instructor.
Formatting guidelines:
• Use the font style “Times New Roman” and font size “12”.
• It is advised to compose your document in MS-Word 2003.
• Use black and blue font colors only.
Solution guidelines:
• Use APA style for referencing and citation. For guidance search “APA
reference style” in Google and read various website containing
information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
• Every student will work individually and has to write in the form of an
analytical assignment.
• Give the answer according to question, there will be negative marking
for irrelevant material.
• For acquiring the relevant knowledge don’t rely only on handouts but
watch the video lectures and use other reference books also.
Rules for Marking
Please note that your assignment will not be graded or graded as Zero (0) if:
• It has been submitted after due date
• The file you uploaded does not open or is corrupt
• It is in any format other than .doc (MS. Word)
• It is cheated or copied from other students, internet, books, journals etc…