Microeconomics Assignment Help

Microeconomics Assignment Help Service

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About Micro Economics:

The term Micro Economics is derived from the Greek
word mikro- meaning "small. It is studied as a part of
the Economic Study. As against the macroeconomic
study which consists of studying the economic
activities in totality Microeconomics Assignment
Help deals with the effects of nations economic policy
on of growth, inflation, and unemployment etc. One of
the most significant aspects of micro economics study
is to analyze the market mechanisms that create and
establish the relative prices among the products and
services. It also analyses the means of allocating the
scarce resources among the available alternatives.

Why Choose Us?

Accuracy: We are a company employed with highly qualified Economics experts to ensure
fast and accurate homework solutions aimed at any difficult homework both Micro
economics and Macro economics.
Micro Economics Assignment Sample Questions and Answers:
Question 1: What is price elasticity of demand for life saving drugs?
Solution :
Life saving drugs are essentials .To a change in their price there can be no change in the
quantity demanded .That is eD = 0 . Life saving drugs has a perfectly in elastic demand.
Question 2: A decline in the price of good Y by $5 causes an increase of 20 units on its
demand which goes up to 580 units. The new price is $15. Calculate eD.
Solution :
= $5
P1

= 20

= $15

P = $20

Q1 = 50 units
Q = 30 units

eD
Good Y

20
5

20

.30 =

40
15

= 2.6

has an elastic demand.

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Question 3: What will be the value of elasticity of demand if the demand curve is a
horizontal line parallel to x-axis?
Solution :
This is a case of perfectly elastic demand ,
eD = . In this situation, percentage change in quantity demanded is infinity at a price.
Alternative Solution : On a horizontal demand curve, slope (i.e,

eD

1
Slop

. =

1
zero

. =

1
0

) is zero.

= .

Px
eD =

Qx
O

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Question 4: Determine price elasticity of demand using percentage method.

Quantity

Total Outlay ($)

20

100

30

120

Solution :
Outlay means expenditure which is price multiplied by quantity demanded. Thus, by dividing
total outlay by quantity, price figures can be obtained as follows.
And Q = 20 units
and P x Q = $100
P=

100

= 20 = $5

Similarly Q1 = 30 units
And P1 Q1 = $120

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P1 =

1 x 1

100

= 30 = $4

Rearranging P = $5
P1 = $4
= $1
Percentage change in price =

x 100 =

1
5

x 100 = 20%

Also,
Q = 20 unints
Q1 = 30 units
= 10 units
Percentage change in quantity =

x 100 =

10
20

x 100 = 50%

eD = Percentage change in quantity demanded

Percentage change in price
eD =

50%
20%

= 2.5

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Question 5: As the price of a product decrease by 7%, the total expenditure on it gone up
by 3.5%. What can we say about the elasticity of demand for this product?
Solution :
Since with fall in price, total expenditure rises, it is a case of elastic demand, i.e., eD > 1.
Question 6: The price of cauliflower goes up by 8% and the total expenditure by a family
on cauliflower goes up by 8%. What can we say about the elasticity of demand for
cauliflower by this family?
Solution :
Since with rise in price, total expenditure also rises it is a case of inelastic demand, i.e., eD
< 1.

Question 7: A dentist was charging $300 for a standard cleaning job and per month it used
to generate total revenue equal to $30,000. She has since last month increase the price of
dental cleaning to $350. As a result, fewer customers are now coning for dental cleaning,
but the total revenue is now $33,250. From this, what can we conclude about the elasticity
of demand for such a dental service?
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Solution :
Given,
P = $300, Total revenue (P x Q) = $30,000
P1 = $350, Total revenue (P1 x Q1) = $32,000
Therefore, when P = $300, Q =
and when P1 = $350, Q1 =
eD

5
50

300
100

1 1
1

3
100

30,000
300

32,250

350

= 100

= 95

= 0.3

Thus, demand for dental service is inelastic since eD is less than one.

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