ECO401 - Economics

Total Marks 5
Starting Date Friday, May 28, 2021
Closing Date Thursday, June 03, 2021
Status Open
Question Title Consumer Behavior: Consumption side analysis
Question Description
In year 2020, Pakistan faced the deadliest of the natural calamities in form of locust attack. Due to this the agriculture sector faced a loss of almost 353 billion rupees. Both the winter and summer crops were damaged partially, and after many years the Government of Pakistan decided to import the food items, to maintain the market price. In this background let’s assume, two groups, A and B are living in the country, with certain rational behavior towards the commodity prices of essential food items like wheat. Both groups have different opinion about wheat. People from group A consider wheat as a staple food, while people from group B consider it as a normal good. During the last month due to the fall in the commodity prices, it was observed, that people from group A, decreased their demand for wheat, where as people from group B increased their demand for wheat.

Requirement:

Which type of product is wheat for people from group A and people from group B?

What will be the income effect for the people from group A?

Four types of market structure
Monopolistic competition
Oligopoly
Monopoly
Perfect competition
In our case there is a perfect competition because so many sellers having identical or same products. Which are characteristics of perfect competition.

Recommended:
Pure or perfect competition is a theoretical market structure in which the following criteria are met: all firms sell an identical product (the product is a “commodity” or “homogeneous”); all firms are price takers (they cannot influence the market price of their product); market share has no influence on price; buyers have complete or “perfect” information – in the past, present and future – about the product being sold and the prices charged by each firm; resources such a labor are perfectly mobile; and firms can enter or exit the market without cost.

Note: - We are not responsible for any mistake, this is for your idea or help, need to verify yourself.

Unlike the Classical economists, Keynes believed that the economy could get stuck in the short run for a significant period of time because:
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