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Micro Economics Homework Help Micro Economics Assignment Help
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Mark Austin
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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 Micro Economics Homework
Help deals with the effects of nation’s 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 Homework Sample Questions and Answers:
Question 1. A 20% fall in the price of sugar leads to 25% rise in its demand. Calculate
the price elasticity of demand. Comment on the commodity.
Solution:
eD = Percentage change in quantity demanded
Percentage change in price
Thus, eD = 25%
20% = 1.25
Sugar has an elastic demand as its coefficient of elasticity of demand is greater than one.
Sugar is a luxury for this household.
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Question 2. When the price of wheat goes up by 10% its demand falls from 800 Units to
600 units .Calculate price elasticity of demand. Will the demand curve for wheat be flatter
or steeper?
Solution:
Given,
Original quantity (Q) = 800 units
New quantity (Q) =600 units
Change in quantity(∆Q) = 200 units
Percentage change in quantity = ∆𝑄
𝑄 X100 =
200
800 X 100=25%
eD = Percentage change in quantity demanded
Percentage change in price
eD = 25%
10% = 2.25
Wheat has an elastic demand .it is a luxury for this household. The demand curve for wheat
will be flatter showing more than proportionate change in quantity demanded to a change
in price.
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Question. 3. What is the relationship between slope and elasticity of a demand curve?
Solution: The formula of elasticity of demand is
eD = ∆𝑄
∆𝑃 .𝑃
𝑄
Formula of slope of demand curve is:
Slope = ∆𝑃
∆𝑄
The relationship between slope and elasticity of a demand curve is
eD = 𝟏
𝐒𝐥𝐨𝐩 .𝑷
𝑸
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Question.4. A consumer spends $40 on a good at a price of $1 per units and $60 at a price
of $2 per unit. What is the price elasticity of demand? What kind of good it is? What shape
its demand curve will take?
Solution:
Given,
Original price (P) = $1
New price (P1) = $2
Change in price (AP) = $1
From the expenditure (P × 𝑄) figures of $40 and $60, quantity demanded figures can be
calculated as follows:
Original quantity demanded (Q) = 𝑃𝑋𝑄
𝑃 =
$40
$1 40 units
New quantity demanded (Q1) = 𝑃1𝑋𝑄1
𝑃1 =
$60
$2 = 30 units
Change in quantity (AQ) = 10 units.
eD = ∆𝑃
∆𝑄 .
𝑃
𝑄 =
10
1 .
1
40 =
1
4 = 0.25
The good has an inelastic demand .It is a necessity like food, fuel etc. The demand curve
for this good is steep.
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Question.5. Price of rice falls from $5 to $4 per kg. This leads to an increase in its demand
from 10 kg to 20 kg in a month. Comment on its elasticity of demand.
Solution : Given,
P = $5 Q = 10 kg
P1 = $4 Q1 = 20 kg
∆𝑃 = $1 ∆ 𝑄 = 10 kg
eD = ∆𝑄
∆𝑃 .
𝑷
𝑸 =
10
1 .
5
10 = 5
Rice has an elastic demand and is a luxury for this household.
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