Economics supply & demand
Assignment 01
MBA/15/3779
K G Sampath Kumara
Course
:
MBA 502 Economic Analyses for Business
Instructor
:
Prof. A T Fonseka
Term
:
January – March 2015
Postgraduate Institute of Management
University of Sri Jayewardenepura
I am fully aware of the content under “plagiarism” stated in Chapter 6 of the PIM student handbook, and I hereby declare and affirm that I have strictly observed the law relating to intellectual property, copyright and plagiarism in this exercise (Student Handbook,
2011:10).
Name
:
K G Sampath Kumra
Registration No
:
MBA/15/3779
Date
:
11th February 2015
Signature
:
……………………….
MCQs
Question
No
Answer
01
02
03
04
05
06
07
08
09
10
(a)
(b)
(d)
(d)
(b)
(c)
(b)
(c)
(e)
(d)
Short Answer Questions
1.
a) Opportunity cost involved in Nihal’s Decision is Rs 680,000/-
Annual Income Forgone
-
Rs.600,000/-
Training Cost Incurred
-
Rs.180,000/-
Scholarship received
-
Rs. (100,000/-)
Opportunity cost
-
Rs.680, 000/-
Meal cost is not an opportunity cost since he has to incur the cost irrespective of his decision.
b) Annual opportunity cost to the country on training the athlete is Rs
100,000/-
2.
(a) Equilibrium Price
Equilibrium Quantity
(Refer Diagram No 01)
=Rs.700/=200 units
1
Diagram No 01
1000
900
900
900
800
800
800
700
700
PRICE
600
600
500
600
500
500
Demand quantity
400
Supply quantity
300
200
100
0
0
50
100
150
200
250
300
350
Quantity
(b) If the price is Rs 600/-, which is below equilibrium price and there will be an excess demand (150 CD’s to 250 CD’s). Due to the competition among buyers to buy CD’s, competing buyers would offer higher price to induce producers to supply more. As result, CD’s price would automatically rise to equilibrium level. (c) If the price is Rs 800/-, which is above the equilibrium price and there will be excess supply (150 CD’s to 250 CD’s). Due to the competition among sellers to dispose of the excess stocks, would automatically bring down the
MBA/15/3779
K G Sampath Kumara
Course
:
MBA 502 Economic Analyses for Business
Instructor
:
Prof. A T Fonseka
Term
:
January – March 2015
Postgraduate Institute of Management
University of Sri Jayewardenepura
I am fully aware of the content under “plagiarism” stated in Chapter 6 of the PIM student handbook, and I hereby declare and affirm that I have strictly observed the law relating to intellectual property, copyright and plagiarism in this exercise (Student Handbook,
2011:10).
Name
:
K G Sampath Kumra
Registration No
:
MBA/15/3779
Date
:
11th February 2015
Signature
:
……………………….
MCQs
Question
No
Answer
01
02
03
04
05
06
07
08
09
10
(a)
(b)
(d)
(d)
(b)
(c)
(b)
(c)
(e)
(d)
Short Answer Questions
1.
a) Opportunity cost involved in Nihal’s Decision is Rs 680,000/-
Annual Income Forgone
-
Rs.600,000/-
Training Cost Incurred
-
Rs.180,000/-
Scholarship received
-
Rs. (100,000/-)
Opportunity cost
-
Rs.680, 000/-
Meal cost is not an opportunity cost since he has to incur the cost irrespective of his decision.
b) Annual opportunity cost to the country on training the athlete is Rs
100,000/-
2.
(a) Equilibrium Price
Equilibrium Quantity
(Refer Diagram No 01)
=Rs.700/=200 units
1
Diagram No 01
1000
900
900
900
800
800
800
700
700
PRICE
600
600
500
600
500
500
Demand quantity
400
Supply quantity
300
200
100
0
0
50
100
150
200
250
300
350
Quantity
(b) If the price is Rs 600/-, which is below equilibrium price and there will be an excess demand (150 CD’s to 250 CD’s). Due to the competition among buyers to buy CD’s, competing buyers would offer higher price to induce producers to supply more. As result, CD’s price would automatically rise to equilibrium level. (c) If the price is Rs 800/-, which is above the equilibrium price and there will be excess supply (150 CD’s to 250 CD’s). Due to the competition among sellers to dispose of the excess stocks, would automatically bring down the