Impact of Pay and Work Environment on Employees Job Satisfaction

Pages: 3 (356 words) Published: September 2, 2010
Given the demand and supply equations for commodity X:
P=80-Q (Demand)
P=20+2Q (Supply)
1)Determine the price and quantity where market can attain Market Equilibrium. Show it graphically. Solution:
P=80-Q (Demand) ……….1
P=20+2Q (Supply) ……….2
80-Q=20+2Q
80-20=Q+2Q
60=3Q
Q=60/3
Q=20
Put the value of Q in equation (1) DEMAND
P=80-Q
P=80-20
P=60
Put the value of Q in equation (2) SUPPLY
P=20+2Q
P=20+2(20)
P=20+40
P=60
Q=20 | P=60|

DIAGRAM

3)Calculate and show graphically the Price Elasticity of Supply when P1=\$4
P2=\$5
SOLUTION:
Price| Quantity|
P₁=4| Q₁=150|
P₂=5| Q₂=210|

PRICE ELASTICITY OF SUPPLY
η= Percentage change in quantity supply
Percentage change in price
Q₂-Q₁Q₁
η= -------------
P2-P₁P₁
210-150150
η= --------------
5-44
60150
η= -------
14
η= 60150×41
η=25×41
η=85
η=1.6
PEOS>1 then supply is price elastic

DIAGRAM

4) Suppose that the income of a consumer has increased from \$32000 to \$46000 affecting his demand to b increased from 10 to 15. Determine the nature of commodity. Solution:
INCOME| QUANTITY DEMANDED|
Y₀| 32000| Q₀| 10|
Y₁| 46000| Q₁| 15|

INCOME ELASTICITY OF DEMAND
IN CASE OF NORMEL GOODS

η= Percentage change in quantity demanded
Percentage change in income
Q₀-Q₁Q0+Q₁
η= ----------
Y₀-Y₁Y₀+Y₁

10-1510+15
η= -----------------
32000-4600032000+46000

-525
η= -----------
-1400078000

η=525×7800014000
η= 15×7814
η=7870
η= 1.114
If IEoD > 1 then the good is a Luxury Good and Income Elastic

6) When the price of good X is increased from \$3 to \$4 the demand for good Y is...

Please join StudyMode to read the full document