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Tuesday, January 3, 2012

ECO402 Assignment No 2 Solution & Discussion


Assignment:
The Case:
Urea is used as a fertilizer in cultivation of agricultural products. In Pakistan there are very
few industrial plants for the production of urea. Energy shortage has badly affected the
production of these industrial plants. This situation has increased the price of urea. To
provide incentives to farmers, government has decided to control the price by setting price
Rs.2500 per bag. Demand and cost functions of urea industry are given below:
P = 6000-4Q
TC = 500,000 + Q2
Where Q is quantity of urea, P is price being paid by the farmers and TC is total cost which
is borne by urea industry.
Requirements:
Considering the above scenario, answer the questions stated below:
A. What price would be charged and what quantity would be supplied by the urea
industry in order to maximize its profit.
B. What would be the maximum profit that can be earned by the urea industry?
C. How much profit urea industry will earn after imposition of the new price by the
Government?
D. Being a student of Economics, suggest what production decision urea industry
should take in the short run as a result of imposition of price by the government.
(Marks = 5+5+3+2)


Read more: ECO402 Assignment No 2 Solution & Discussion Due Date:06-01-2012 - Virtual University of Pakistan http://vustudents.ning.com/group/eco402microeconomics/forum/topics/eco402-assignment-2#ixzz1iOYOOgaJ

1 comment:

  1. Kindly upload solution of ECO 402 assignment # 2 solution, today s last date, plz do that ASAP. thnx

    ReplyDelete