Aggregate Demand and aggregate Supply

at
Categories
Tags

 

Q1. (4 Points)
Consider an example of the vehicle tires; if the supply and demand are:
Qs = – 500 + 8p ; Qd = 500 –2 p
Solve:
a) Equilibrium price and equilibrium quantity and calculate total revenue?
b) If there were a price celling equal to 120 SAR per each tire imposed, calculate the price elasticity of demand? Does this consider elastic, inelastic or unit elastic? Also, calculate the total revenue?
c) Now consider the vehicle battery; if the supply and demand is:
i. Qs = – 100 + 3p ; Qd = 1100 – 9p, calculate the equilibrium price and equilibrium quantity. Also, calculate Total Revenue.
ii. If there were a price celling of 120 SAR imposed per each pair of battery, calculate the price elasticity of demand? Do the battery prodduct consider elastic, inelastic or inelastic or unit elastic? Also calculate total revenue.
d) Compare the total revenue for the tires and the total revenue you found for the battery. Which one of product’s total revenue has been increased after the price have been increase and why? Explain in words and show the difference in numbers as well.
e) Recall part a (The tires) Calculate the CS & PS. Hint; you need to set Qs=0 & Qd=0 to find the intercept and calculate the CS, PS. you need to set Qs=0

 

& Qd=0 then solve for P to find the intercept and calculate the CS, PS. Where the CS is the area between the intercept for demand and the equilibrium price you found on part a. Do not forget that this area is a triangle so carefully calculate the area. The same thing for PS.
f) Now, if the government impose sales tax equal to 5%, what is the CS, PS, government revenue and DWL and show this on the graph? Hint; price paid by the buyer equal 104 SAR and price received by seller equal 99 SAR, the difference is the tax per tires. The intercept points for the supply and demand on this part are the same as the ones on part e. To find the quantity, plug either the price for the buyer on the demand curve formula or the price for the seller on supply curve formula. Also, remember CS, PS & DWL have triangle area, whereas tax revenue has rectangular area. Graph this manually so you can easily find the answer.
g) Without calculation, would you expect to have higher/ lower government revenue and DWL on the vehicle battery and why?

 

Q2. (1 point)
Assume that Saudi Arabia produce only two products; cupcakes and TVs where are the price and quantity produced are:
Year Cupcake TV
2018 (base year) P= 6 SAR Q= 10,000
P= 2,000 SAR Q= 500

2019 P= 6 SAR Q= 11,000
P= 2,000 SAR Q= 550

2020 P= 8 SAR Q= 9,500
P= 2,200 SAR Q= 450

Calculate GDP deflator for the years 2018, 2019 and 2020. Also, calculate the Nominal and real GDP growth on 2019 & 2020, compare between them by explaining why they are different. Calculate the 2019 & 2020 inflation rates.

 

Sample Solution

exactly leaders influence and build the trust and mutual working relationship between themselves and their followers. What is more, as Day carries on, the transformational theory has been also criticised for ‘one size fits all’ approach of a leader whereas it may very much depend on an organisation, its process, culture or different situations they are found in.

There are many comparisons found between transactional and transformational approaches. According to Avolio B. & Bass B. (2001) transformational theory expand on foundations of transactional and therefore is more effective in achieving common goals as well as personal satisfaction of the followers. A very interesting image of association between leadership styles and gender emerges from findings of William Rosenbach (2018) who established that women are more likely to take transformational approach to leadership than men who, in turn, expose more of transactional approach. According to the author men are better suited for carrying out disciplinary and corrective processes. Women however, look beyond rewarding which is a main trend of transactional leadership, they are also much more effective in providing support and encouragement. Rosenbach comes to a bold conclusion that women are generally more effective in leadership positions whilst men can deter effectiveness and that women are therefore better suited to modern organisations.

In the light of the above, women are increasingly taking over leadership roles within organisations which means that significance of transformational approach will raise in popularity. There are many trends nowadays that suggest the need for changes in leadership mindsets, transformational approach has got a potential to put transactional aside. What is more, as the market becomes more and more globalised, employees have the increasing need to feel empowered and take bigger part in organisational growth, the transactional leadership can be an answer to this. Good management is not only about taking corrective action, employees want to feel supported, valued and motivated, with their personal need for development taken into consideration.

This question has been answered.

Get Answer
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!
👋 Hi, Welcome to Compliant Papers.
Hi, how can I help?