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Get Solution ECO401- Economics Assignment NO.1 FALL 2014
Qs = Qd
200+800P=2000-400P
200+1200P=2000
1200P=1800
P=1800/1200
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
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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
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