ECO401 Assignment 1 Solution and Discussion

• MARKS: 10 ASSIGNMENT: COVID-19 pandemic has been spreading all over the world and affecting millions of people. Health experts are laying emphasis on the importance of frequent hand hygiene along with other precautionary measures to prevent the transmission of COVID-19. Frequent hand washing and hand sanitization are the most effective and easy ways to prevent the spread of this disease. Due to COVID-19 the demand for hand wash and hand sanitizers has been increasing rapidly in all over the world. Dettol, safe guard, lifeboy, hiclean, skincare, hemani, silk etc. are different brands of hand wash and hand sanitizers in Pakistan. Dettol is considered as a most trusted brand providing hygiene products that helps to prevent the spread of COVID-19. Suppose demand and supply function of Dettol hand sanitizers are:
Qd = 4500-7P
Qs= 1500+P
Where ‘P’ is the price in rupees per bottle of hand sanitizer and ‘Qd’ is quantity demanded of hand sanitizer in number of bottles. ‘Qs’ is quantity supplied of hand sanitizer in number of bottles. Requirements: a) Calculate the market equilibrium level of price and quantity of Dettol hand sanitizer. b) Calculate price elasticity of demand using point elasticity method when the company is in equilibrium and interpret the result.

Note related to load shedding: Please be proactive Dear students: As you know that semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs. Best of Luck!

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