Q1: There is a fruit seller who has 30 Kgs of apples to be sold and he wants to fix a price so that all the apples are sold. There are three customers in the market and their individual demand functions are given below:
D1=25-.05P
D2=20-.025P
D3=15-.075P
Where D is the demand and P is the price
Determine:
Ø Market demand equation for the fruit seller
Ø Price at which he can sell all the apples
Ø Individual demands of each of the three customers
Q2a) Determine the market equilibrium price if the demand and supply function is given as:
D = 12p + 8
S = 14p – 4
Where D= demand
S=supply
p= price
Q2b) Determine the equilibrium quantity if price is the same as above
D = 4p – 4q
S = 8q – 4p
Where D= demand
S=supply
p= price
q= quantity
Q3a) Suppose the monthly income of an individual increases from Rs 20,000 to Rs 25,000 which increases his demand for clothes from 40 units to 60 units. Calculate the income elasticity of demand.
Q3b) Quantity demanded for tea has increased from 300 to 400 units with an increase in the price of the coffee powder from Rs 25 to Rs 35. Calculate the cross elasticity of demand between tea and coffee.