Get Solution ECO401- Economics Assignment NO.1 FALL 2014

Qs = Qd

200+800P=2000-400P

200+1200P=2000

1200P=1800

P=1800/1200

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P=1.5

Now we put price in any of demand and supply question

Qs= 200+800P

Qs= 200+800(1.5)

Qs= 200+1200

Qs= 1400

Solution for Q1 b

PЄd = -400 x 1.5/1400

PЄd = -0.429

PЄs = 800 x 1.5/1400

PЄs = 0.857

Solution of Q1 c (graph showing surplus)

Solution of Q2 Part A

PЄd = -0.1035 ( business travelers)

PЄd = -1.335 ( tourists)

Solution of Q2 Part B

discuss the variation

you have to discuss that in business travlers there are regular variation, give some reasons (inelasticity, necessity)
for tourist it is elastic and very irragular variations , there may be many factors like future price expactations, alternative ways etc etc