AL AIN UNIVERSITY OF

SCIENCE AND TECHNOLOGY

COLLEGE OF BUSINESS

ADMINISTRATION

PRINCIPLES OF

MICROECONOMICS

FALL 2015/2016

ASSIGNMENT 1 (DUE ON

WEDNESDAY 21 OCTOBER 2015)

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**1.**

*Refer to the information provided*

in Figure 5.2 below to answer the questions that follow using both point and

midpoint formulas..in Figure 5.2 below to answer the questions that follow using both point and

midpoint formulas..

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**Figure 5.2**

a. If the

price of a hamburger is increased from $8 to $10, compute the price elasticity

of demand.

b. If the

price of a hamburger is increased from $6 to $8, compute the price elasticity

of demand.

c. If the

price of a hamburger is increased from $2 to $4, compute the price elasticity

of demand

d.

At Point *C*the price elasticity of

demand is -1. Examine the elasticity of the demand curve along line segment *EC.*

2.

Ahmad consumption from fish is

4 Kg per month when his income is AED 15,000. His consumption from fish rises

to 6 Kg as his income rises to AED 18000. Compute the income elasticity for

Ahmad’s demand.

3.

If the cross-price elasticity of demand

between fish and chicken is 2, find the percentage change in quantity of

chicken if the price of fish is increased by 2.