Answer Happy

Student ID number: 3. The following table gives demand schedule for Good A. Price (£) Quantity demanded (Qd) £100 200 £95 400 £90 500 £85 600 £80 700 £75 800 (Explain what is the price elasticity of demand (PED) and how is it calculated? Write down the full formulae of PED that is described in class (proportionate change formulae). (3 marks) (II) Assume that the current market price for Good A is £90 and 500 units is demanded. Calculate the PED if the price decreases to £85. (Note: You must show all your calculation step by step) (4 marks) (H) is the demand for Good A elastic, unit-elastic, or inelastic? Evaluate the value of the PED and explain your answer using the concept of elasticity. (3 marks) (iv) What would the slope of the demand curve for Good A look like? Based on your calculation and your analysis, draw the demand curve. (Hint Relatively flat, steep or constant demand curve) (1 mark) () Suppose that the cross-price elasticity between good A and Good B is - 1.34. Using the concept of cross-price elasticity explain the relationship between Good A and Good B and give an example. (2 Marks) (vi) Suppose that when Peter's income increases by 5%, his consumption of Good A increases by 10%. For Peter, what kind of good it is? Explain your answer (hint: your answer must refer to income elasticity of demand) (2 Marks)
Student ID number: PART C (20 marks) - please answer ALL questions. The tables below show the components of GDP for two neighbouring countries: Altis and Stratis 1. Using the information in the tables below calculate the GDP of Altis and Stratis, you must include the formulae and show your calculation. (3 Marks) COMPONENTS OF GDP (billions of Us Relat COMPONENTS OF GDP (billions of US Debat Consumption Consumption Goods 984 Goods 257 Services 691 Services 104 Investment Investment 231 69 Business Investment Residential Investment Business Investment Residential Investment 22 29 Government Expenditure Government Purchases Government Expenditure Government Purchases 169 89 Net exports Net exports Exports 339 Exports 158 Imports 237 Imports 93 Table 1: Altis's Economic indicators Table 2: Stratis's Economic indicators 2. Based on their annual GDP values, evaluate the economic development of Altis and Stratis. Which country is performing better and why? Explain your answer. (2 Marks) 3. How can the GDP of countries of different sizes be compared? If the population of Altis and Stratis, are 113 millions and 15 millions respectively, what can you say about the economy of these countries, explain your answer in detail? (2 Marks)