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COBECON Term 2 AV 221-2l122 Problem Set 1 In in: 1. Read the questions carefully and answer only what is required. Show complete solutions. incomplete

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COBECON Term 2 AV 221-2l122 Problem Set 1 In in: 1. Read the questions carefully and answer only what is required. Show complete solutions. incomplete solutions will not be credited. For nal answers that involve decimal places. round off to the nearest 2 decimal places. 39:: your nal ang. For nos. 1-4. consider the following problem (10 pts): As an economist hired by Apple Inc.. the company wants you to compute the elasticity of demand of their iPad mini products. The table below shows an observation the company made: Observation Price Quantity # (in 5) (per unit) 1. (3 pts) What is the price elasticity of demand between observation 1 and observation 3? 2. (2 pts) Based on your computation in #1, is the price elasticity of demand for iPad minis elastic. unit-elastic. or inelastic? What is the interpretation? 3. {3 pts) What is the price elasticity of demand between observation 4 and 3? 4. (2 pts} Based on your computation in #3. is the price elasticity of demand for iPad minis elastic. unit-elastic. or inelastic? What is the interpretation? For nos. 5-9. consider the following problem (20 pts): You were hired by Samsung to do an analysis on their two leading products. the Samsung Galaxy 522 Plus and 822 Ultra. The table below shows the possible combinations of both smartphones that they could produce monthly: Alternative Samsung Galaxy 322 Samsung Galaxy 522 Ultra {per unit} Plus (per unit} -\" 5. (4 pts) Graph the Preduction-Possibility-Frontier (PPF) curve with 822 Plus in the x-axis and 822 Ultra in the y-axis. 6. (4 pts) Suppose Samsung wants to produce 900 units of the Galaxy 522 Plus and around 500 units of the Galaxy 822 Ultra. Would the company be producing efciently or inefciently? Why? 7'. (4 pts) Samsung now acquires a new factory in the Philippines and they are able to produce more units of both their smartphones. Draw the new PPF curve that can best represent the changershift together with a good explanation. B. (4 pts) Assuming 322 Plus is Good X and 822 Ultra is Good Y. what is the Marginal Rate of Transformation (MRT) from altematiye A to C and its interpretation? 9. (4 pts) Assuming 322 Ultra is Good X and 322 Plus is Good Y. what is the Marginal Ftate of Transformation (MRT) from altematiye D to B and its interpretation? For nos. 10-15. consider the following problem (20 pts): You are studying the supply and demand for a certain good. The demand curve is given by the equation P = 1200 1012 while the curve is given as P = 450 + 10D. Answer the following questions: 10. (3 pts) Draw the graph representing the supply and demand curves. 11. (3 pts) What would be the equilibrium price and quantity of the good? 12. (5 pts} A new rm enters the market that produces the same good. which shifts the supply curve to P = 390 + 30G. What would be the new equilibrium price and quantity? Draw the graph. show the shift and new equilibrium price and quantity. 13. (5 pts) Because of the entry of the new rm. the government suddenly proposes a policy in order to protect the market. This causes the demand curve to shift to P = 1350 400. Using the new supply curve in #12. what would be the new equilibrium quantity and price? Draw the graph. show the shift and new equilibrium price and quantity. 14. (2 pts) Using the demand and supply curves in #10. compute the consumer surplus. Shade and show this in the graph. 15. (2 pts) Using the demand and supply curves in #10. compute the producer surplus. Shade and show this in the graph

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