econ201
abdulazizben74
assignment1summer2021.docx
College of Administrative and Financial Sciences
Assignment-1
Deadline: 01/07/2021 @ 23:59
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Course Name: Macroeconomics |
Student’s Name: |
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Course Code: ECON201 |
Student’s ID Number: |
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Semester: Summer |
CRN: |
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Academic Year: 1441/1442 H |
For Instructor’s Use only
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Instructor’s Name: Bandar Almutairi |
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Students’ Grade: / 5 |
Level of Marks: High/ Medium/ Low |
Instructions – PLEASE READ THEM CAREFULLY
· Assignments will vary across CRNs, so make sure you do the assignment associated with your CRN.
· Any matched results will be considered cheating, so it results into ZERO grade.
· Show all works for calculation, final result will not be accepted without showing how you reach to it.
· YOU CAN NOT USE ANY OUTSIDE RESOURCES FOR HELP ON THE ASSIGNMENT & IF YOU HAVE ANY QUESTION, ASK ONLY YOUR INSTRUCTOR ( [email protected] ). OTHERWISE, IT WILL BE CONSIDERED CHEATING.
· The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
· Assignments submitted through email will not be accepted.
· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
· Students must mention question number clearly in their answer.
· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
· Submissions without this cover page will NOT be accepted.
Q1. (4 Points)
Consider an example of the vehicle tires; if the supply and demand are:
Qs = - 500 + 8p ; Qd = 500 –2 p
Solve:
a) Equilibrium price and equilibrium quantity and calculate total revenue?
c) Now consider the vehicle battery; if the supply and demand is:
i. Qs = - 100 + 3p ; Qd = 1100 – 9p, calculate the equilibrium price and equilibrium quantity. Also, calculate Total Revenue.
ii. If there were a price celling of 120 SAR imposed per each pair of battery, calculate the price elasticity of demand? Do the battery prodduct consider elastic, inelastic or inelastic or unit elastic? Also calculate total revenue.
d) Compare the total revenue for the tires and the total revenue you found for the battery. Which one of product’s total revenue has been increased after the price have been increase and why? Explain in words and show the difference in numbers as well.
e) Recall part a (The tires) Calculate the CS & PS. Hint; you need to set Qs=0 & Qd=0 to find the intercept and calculate the CS, PS. you need to set Qs=0 & Qd=0 then solve for P to find the intercept and calculate the CS, PS. Where the CS is the area between the intercept for demand and the equilibrium price you found on part a. Do not forget that this area is a triangle so carefully calculate the area. The same thing for PS.
f) Now, if the government impose sales tax equal to 5%, what is the CS, PS, government revenue and DWL and show this on the graph? Hint; price paid by the buyer equal 104 SAR and price received by seller equal 99 SAR, the difference is the tax per tires. The intercept points for the supply and demand on this part are the same as the ones on part e. To find the quantity, plug either the price for the buyer on the demand curve formula or the price for the seller on supply curve formula. Also, remember CS, PS & DWL have triangle area, whereas tax revenue has rectangular area. Graph this manually so you can easily find the answer.
g) Without calculation, would you expect to have higher/ lower government revenue and DWL on the vehicle battery and why?
Q2. (1 point)
Assume that Saudi Arabia produce only two products; cupcakes and TVs where are the price and quantity produced are:
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Year |
Cupcake |
TV |
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2018 (base year) |
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2019 |
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2020 |
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Calculate GDP deflator for the years 2018, 2019 and 2020. Also, calculate the Nominal and real GDP growth on 2019 & 2020, compare between them by explaining why they are different. Calculate the 2019 & 2020 inflation rates.
