UNICAF UNICAF UNICAF UNICAF 1. Plot on a single diagram the demand and supply curve. (4 marks) QUESTION 1 2. A fall in the price of a commodity, holding everything else constant, results in and is referred 1. Using the midpoint method, calculate the price elasticity of demand when the price of a 2. What would be the excess demand or supply if price were set at 10 cept? (4 marks) to as: The weekly demand and supply schedules for T-shirts (in millions) in a free market are as follows: T-shirt rises from $5 to $6 and the average tourist income is $20,000. Also calculate it 3. What would be the excess demand or supply if price were set at 40 cept? (4 marks) an increase in demand, when the average tourist income is $30,000. a decrease in demand, Price Quantity Quantity Supplied 4. Define the equilibrium of a market. Find the equilibrium price and quantity. (4 marks) an increase in the quantity demanded 2. Using the midpoint method, calculate the income elasticity of demand when the price of Demanded a decrease in the quantity demanded. a T-shirt is $4 and the average tourist income increases from $20,000 to $30,000. Also 5. Suppose that an increase in consumers' income results in an increase of strawberries" demand. . When an individual's income rises, while everything else remains the same), that person's calculate it when the price is $7 demand for a normal good: The demand of strawberries rises by 30 million tins/year at each price level. Find the new TOTAL MARKS equilibrium price and quantity. (4 marks) rises, falls, Amazon.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 20 remains the same, 10% discount on every book it s be divided into any of the above. two distinct groups according to their likely resp discount. The accompanying table 1. What is the demand curve? What does the law of demand say? QUESTION 3 . When an individual's income falls, while everything else remains the same, that person's shows how the two groups respond to the discount. demand for an inferior good: 2. What is the supply curve? What does the law of supply say? Answer True/False increases 1. A change in the price of a good will cause a shift in its demand curve. . 3. What are the equilibrium price and quantity? decreases . remains unchanged, or Group A (sales per week) Group B [sales per week) 4. Assume that changes in fashion cause the demand for T-shirts to rise by 4 million at each 2. An increase in consumers' incomes will cause an expansion in the demand of all goods. we cannot say without additional information. Volume of sales before 1.55 million 1.50 million the 10%% discount price. What will be the new equilibriu and quantity? Has equilibrium 3. The price charged for a good is the equilibrium price. Volume of sales after 1.65 million 1.70 million quantity risen as much as the rise in demand? Explain why or why not. QUESTION 5 the 10% discount 4. An inferior good is one that has been badly produced. 5. Now plot the data in the table and mark the equilibrium. Also plot the new data The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town corresponding to (b). 5. Mad cow disease led to an increase in the price of park. of Crystal Lake according to the average income of the tourists visiting. QUESTION 2 1. Using the midpoint method, calculate the price elasticities of demand for group A and QUESTION 4 group B. (10 marks) The data in the table above represent the market demand and supply for strawberries over a Choose the right answer: Price of T-shirt Quantity of T-shirts Quantity of T-shirts range of prices. 2. Explain how the discount will affect total revenue from each group. (5 marks) 1. In drawing an individual's demand curve for a commodity, all but which one of the following for are tourist ingon 570,060 Frage tourist income is 530,090 3. Suppose Amazon.com knows which group each customer belongs to when he logs on and Price (cents) Quantity Demand are kept constant? (million tins/year) Imillion instant 3,000 5,000 can choose whether or not to offer the 10% discount. If Amazon.com wants to increase its 2.400 4,200 The individual's money income, 1.600 3,000 total revenue, should discounts be offered to group A or to group B, to neither group, or The prices of other commodities, 1.300 The price of the commodity under consideration, to bath groups? (5 marks) 110 The tastes of the individuals. Page 1 of 4 Page 2 of 4 Page 3 of 4 Page 4 of 4