# ECO402 Assignment 1 Solution and Discussion

• SEMESTER SPRING 2020
MICROECONOMICS (ECO402)
ASSIGNMENT
DUE DATE: JUNE 01, 2020 MARKS: 10
Case#01:
Pakistan electricity sector is a developing market. For years, the matter of
balancing the country’s supply against the demand for electricity had remained
an unresolved matter. According to Pakistan Economic Survey 2018-19, the
installed electricity generation capacity reached 34,282 megawatts (MW) in Jul-
Mar 2018-19 compared to 33,433 megawatts (MW) in the corresponding period of
previous year, recording a 2.5% growth. Despite the fact that Pakistan’s installed
capacity to generate electricity has surged up, this sector is still facing manifold
issues. Let’s suppose the quantity demanded and quantity supplied at different
prices per unit of electricity are given in the following table:
Per unit Price (Rupees) Quantity Demanded
(Thousand MV)
Quantity Supplied
(Thousand MV)
20 25 14
24 22 16
26 18 18
28 16 20
Requirements:
Keeping in mind the above table, you are required to:
A. Identify the per unit equilibrium price of electricity.
B. Calculate the price elasticity of demand and price elasticity of supply when
per unit price of electricity is rupees 24.
Marks: (1+6)
Case#02:
Meat is a consumable food that appears in various forms in Pakistanlivestock
markets including beef, mutton and poultry. Pakistan livestock sector has 50%
share in agricultural GDP. Meat and poultry are great sources of protein. They
also provide lots of other nutrients like iodine, iron, zinc, vitamins (especially
B12), and essential fatty acids. The high cost of a nutritious diet can worsen
nutrition outcomes, especially for low-income households. Consumer Price Index
(CPI) is used to assess the situation of Inflation. The monthly price review shows

the prices of 53 items, including beef, mutton and chicken in 17 major cities of
Pakistan. The information about nominal prices and CPI of beef, mutton and
chicken for the year 2019 and year 2020 is given below:
Item Unit Year Nominal Price in
Price
Beef Kg
April-
2019
375.00 336.48
April-
2020 450.00 372.48 ?
Mutton Kg
April-
2019
950.00 350.53
April-
2020 1000.00 380.63 ?
Chicken,live Kg
April-
2019
179.88 225.63
April-
2020 128.00 168.32 ?
Requirements:
Keeping in mind the above case and assuming April-2019 as the base year, find
the real price of beef, mutton and chicken for April-2020.
Marks: (1+1+1)
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Dear students!
As you know that Pre Mid-Term 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
semester, therefore no excuse will be entertained after due date of
assignments, quizzes or GDBs.

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