**ECO401 Economics Assignment 1 Solution & Discussion Fall 2020**

SEMESTER FALL 2020

ECONOMICS (ECO401)

ASSIGNMENT I

Marks: 10

Due date: 30 Nov 2020

**CASE**:

For every low, there’s a high and it is a fact that pandemic of COVID-19 has a silver lining too along with its negative impact on economy. As we know that during this lockdown, people restricted visiting markets and stores in order to lessen the penetration rate of this disease. This is how pandemic helped to reduce the operational cost and also uplifts the e-commerce sales channel development. To cater this increase in e-commerce sales, Daraz, Pakitan’s biggest digital store launched dMart to provide the service of grocery delivery at doorstep. This online grocery store is dealing in number of items like as Surf excel, Lipton Yellow Label tea, Hand sanitizer, Knorr Chilli Garlic and Tomato Ketchup etc. Suppose the quantity demanded and quantity supplied functions for Surf excel of this dMart grocery store during this lockdown are as below:

Qd = 1900 - 60P

Qs = 300 + 20P

Where ‘P’ is the price in rupees of a packet of Surf excel and ‘Qd’ is quantity demanded of a packet of a Surf excel. ‘Qs’ is quantity supplied of a packet of Surf excel.

**Requirements:**

a. Calculate the market equilibrium level of price and quantity.

b. Calculate price elasticity of supply using point elasticity method when dMart is in equilibrium and interpret the result.

c) What will happen to supply, equilibrium price and equilibrium quantity of a packet of Surf excel if dMart improves technology?

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ECO401 Economics Assignment 1 Solution & Discussion Fall 2020

**Solution**:

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