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1.Which one of the following statements on nationalisation and privatisation is correct?
[1] Nationalisation is the transfer of ownership from the public sector to the private
sector.
[2] Privatisation is the transfer of ownership from private enterprise to government.
[3] One of the arguments in favour of privatisation is that the privatised firm may attract
foreign direct investment.
[4] Commercialisation is the same as privatisation.
2.The demand for laptop is given by the following equation: Q = 95 - 2PL + Ppc + 51 Where is the quantity of laptop demanded, P. is the price of laptop, Ppc is the price of PC, and I is the average consumer income. The supply of laptops is given by the following equation: Q = -8 +6P2 - 2Ppc - W where Q is the quantity of laptop supplied, and W is the wage of average workers in this industry. For parts a-h, assume Ppc = 5, I = 20, and W = 6. a. Find the inverse demand equation. (Hint: find P as a function of QD. For simplicity you can substitute Ppc = 5 and 1 = 20 in the demand equation.) b. Graph the inverse demand curve for laptop. c. What is the demand choke price? d. Find the inverse supply equation. (Hint: find PL as a function of Q. For simplicity you can substitute Ppc = 5 and W = 6. in the supply equation.) e. Graph the inverse supply curve.
ULTUU/PSOT_ch02.pdf f. What is the supply choke price? g. Does laptops market clear if P =5? Explain. h. What is the equilibrium? (Hint: do not forget to check your answer) 1. What happens to the equilibrium when the average consumer's income increases to 1 = 36? Explain your answer in plain English, using graphs, and math (Hint: the first step is substituting 1 = 36 in the demand equation. Still, Ppc = 5 and W = 6) j. * Is laptop a normal or an inferior good? k. What happens to the equilibrium when the price of PC increases to Ppc = 25 ? Explain your answer in plain English, using graphs, and math (Hint: the first step is substituting Ppc = 25 in both demand and supply equations. Still, I = 20 and W = 6) 1. * Are laptop and PC complements or substitutes?
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