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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.Late submission will NOT be accepted.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 acceptedCollege of Administrative and Financial Sciences
Problem Solving 1
Deadline: 29 February 2020 @23:59
Course Name: MICROECONOMICS Student’s Name:
Course Code: ECON101
Student’s ID Number:
Semester: 2
CRN:
Academic Year: 1441 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: Marks Obtained/30
Level of Marks: High/Middle/Low
Problem 1
Bill can produce either tables or chairs. Bill can work up to 10 hours a day. His production
possibilities are given in the table below:
Tables
Chairs
0
100
10
80
20
60
30
40
40
20
50
0
1) Construct the production possibilities frontier (PPF) for Bill. Put tables on the Horizontal axis
and chairs on the vertical axis.
2) What is Bill’s opportunity cost of producing one additional table?
3) What is Bill’s opportunity cost of producing one additional chair?
4) Currently Bill is producing 20 tables and 40 chairs.
a)
Is this allocation of resources efficient? Why?
b)
Show this allocation on the graph and advise Bill how he can be more efficient.
Problem 2
Suppose the market for corn is given by the following equations for supply and demand:
QS = 2p − 2
QD = 13 − p
where Q is the quantity in millions of bushels per year and p is the price.
1) Calculate the equilibrium price and quantity.
2) Sketch the supply and demand curves on a graph indicating the equilibrium quantity and
price.
3) Calculate the price-elasticity of demand and supply at the equilibrium price/quantity.
4) The government judges the market price is under expectations and announces a price floor
equal to $7 per bushel.
a) Would there be a surplus or a shortage?
b) What would be the quantity of excess supply or demand that results?
c) Use the graph to show you results.

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