ECON 201

Assignment 1

ECON 201

Course Name: Macroeconomics	Student’s Name:
Course Code: ECON201	Student’s ID Number:
Semester: II	CRN:
Academic Year:

For Instructor’s Use only

Instructor’s Name:
Students’ Grade:      / 15	Level of Marks:

Instructions – PLEASE READ THEM CAREFULLY

• This assignment is an individual assignment.
• The due date for Assignment 1 is by the End of Week 7 (19/01/2023)s
• The Assignment must be submitted only in WORD format via the allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling in your information on the cover page.
• Students must mention question numbers clearly in their answers.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
• All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

Submissions without this cover page will NOT be accepted.

Assignment 1 Questions: Week 2 to Week 3: – [15 Marks]

1. Water is necessary for life. Is the marginal benefit of a glass of water large or small? Give an example of some action from your real life that has both a monetary and nonmonetary opportunity cost. (3 Mark)

• What does the “invisible hand” of the marketplace do? Explain the two main reasons of market failure and give an example of each. (3 Marks)

• How does a price ceiling set below the equilibrium level affect quantity demanded and quantity supplied? (3 Marks)

• What would be the impact of imposing a price floor below the equilibrium price? If a price floor benefits producer, why does a price floor reduce social surplus? (3 Marks)

• Illustrates the market for Pizza has the following demand and supply  

schedules: (3 Marks)                                                                                     

Price	Quantity Demanded	Quantity Supplied
$3	115	37
$4	95	55
$5	80	80
$6	67	95
$7	50	110
$8	38	122

1. Graph the demand and supply curves. What is the equilibrium price and quantity in this market?

• If the actual price in this market were above the equilibrium price, what would      

drive the market toward the equilibrium?

• If the actual price in this market were below the equilibrium price, what would

drive the market toward the equilibrium?