Narsee monjee assignments Sep 2020 - Assume that a consumer consumes two commodities X and

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Business Economics

1. Assume that a consumer consumes two commodities X and Y and makes five combinations for the two commodities:

TABLE GIVEN BELOW
Combination Units of X Units of Y
A 25 3
B 20 5
C 16 10
D 13 18
E 11 28

Calculate Marginal rate of Substitution and explain the answer. (10 Marks)

2. With the help of the concept of production function. Briefly explain the Law of Variable Proportions and Law of Returns to Scale. Elaborate your answer by citing real world examples. (10 Marks)
3. a. Calculate the elasticity of demand for the following data: (5 Marks)
When the price is Rs 20 per unit, demand for a commodity is 500 units. As the price falls to Rs15 per unit, demand expands to 800 Units
3. b. From the given demand and supply market equation, Calculate the equilibrium price and quantity.
Qd=400-3Ps
Qs=200+2P (5 Marks)

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