ECON201

Course Name: MacroeconomicsStudent’s Name:
Course Code: ECON201Student’s ID Number:
Semester: IICRN: 22533
Academic Year: 1442/1443 H, 2nd Term

For Instructor’s Use only

Instructor’s Name: Dr Ghazala Aziz
Students’ Grade:             / 5Level 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)                                                                                     

PriceQuantity DemandedQuantity Supplied
$311537
$49555
$58080
$66795
$750110
$838122
  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?