1)Suppose the change in the price of good A from $20 to $70 causes the individual's demand for good B to shift from D2 to D1

1)By cross elasticity of demand we mean the change in quantity demanded for one commodity due change in price of the other related commodity.

Question 35 - it is said that the price in the commodity rises from 20$ to 70$ ,in the parallel graph we see that the demand curve shifts leftwards indicating a fall in quantity demanded . There the cross elasticity of demand is negative.

This can be further explained with the help of the formula :

eBA= Percentage change in Quantity demanded for commodity B / Percentage change in price for commodity A

where, Percentage change in quantity demanded for B = (Q1-Q)/ Q *100

Q1= new value of quantity, Q= Old value of quantity

from the graph provided in the question :(45-105)/105*100 = -57.14%

Percentage change in price for commodity A = (P1-P) / P *100  

P1= new price , P=old price of the commodity

from the graph provided in the question :(70-20)/20*100 = 250%

Cross elasticity = Percentage change in Quantity demanded for commodity B / Percentage change in price for commodity A

-57.14% / 250% = -0.22%

Hence ,the cross elasticity of demand is -0.22%, indicating a negative cross elasticity.   

Question 36 - when the price rises from 20$ to 70$ an individual's demand shifts from D2 to D1

The goods A and B are complementary , because the percentage change in price is greater than the percentage percentage change in quantity which means increase in the price for A leads to a fall in the demand for B.

For example,bread and butter, a fall in price of butter will result in the quantity demanded for not only bread but also butter and vise-versa.

Question 37 - when we use the end point method in cross price elasticity we mean the percentage change in the quantity or price from a beginning point ,we use the formula that we use to compute cross price elasticity.

In the question it is already mentioned that the cross elasticity is -7, it means that the good are complements

,implying a rise in price of one commodity will result in fall of the quantity demanded for the other related commodity.

Question 40 - From the graph provided in the question , we derive that the curves, D-steep is slightly inelastic where as D-flat is elastic ,which implies that there is a bigger change in quantity demanded of a product to a change in price on D-flat. The option is correct because a percentage change in quantity of a commodity is greater than the percentage change in price. For a small change is price,the quantity demand will change more.

2)

Solow model of growth

· Robert Merton Solow is an American economist particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him.

· Prof. R. Solow builds his model of economic growth as an alternative to the Harrod-Domar model of growth without its crucial assumption of fixed proportion in production. He brings a continuous production function linking output to input of Labor and capital which are substitutable.

Assumptions

· One composite commodity is produced

· Output is net output after depreciation of capital

· Labor and capital are substitutable

· Prices and wages are flexible

· There is full employment of labor

· There are constant returns to scale

· There is neutral technical progress

· The saving ratio is constant

· The two factors of production land and capital are paid according to their marginal physical productivity

Basic idea

· In Solow model there would be tendency for KL (capital labor ratio) to adjust itself through time in the direction of equilibrium ratio.

· If the initial ratio of capital to labor is more capital and output would grow more slowly than labor force and vice versa.

· Solow's analysis is convergent to equilibrium path to start with any capital labor ratio.

Explanation

· Solow takes output as a whole, the only commodity in the economy

· Annual rate of production is Y(t) part of it is consumed and rest is saved and invested.

· That which is saved is a constant s, and rate of saving is s Y(t)

· K(t) is the stock of capital and net investment or rate of increase of this stock of capital is K

Equations

· Basic equation is K-sY    …….. (1)equation

· Since output is produced with capital and labor, technological possibilities are represented by the production function

· Y=F(K.L) that shows constant returns to scale   …….. (2)equation

· Inserting equation 2 in 1 we get K=sF(KL) …….. (3)equation

· In equation 3 i.e. K=sF(K,L)

o L Represents total employment since population is growing exogenously, the labor force increases at a constant relative rate n thus fourth equation is

L(t) = L"   …….. (4)equation

· Solow regards n as Harrod natural rate of growth in the absence of technological change and L(t) as the available supply of labor at the rate t

· By inserting equation 4 in 3 we get

· K=sF(K, Lnt)

· He regards this basic equation of as determining the time path of capital accumulation K that must be followed if all available labor is to be fully employed.

Growth pattern 1

Equation r=sF(r,1)-nr

here is the K/L ratio of capital to labor

N is relative change of Labor force L/L

The function r=sF(r,1) represents output per worker as a function of capital per workers. Total product curve as varying amounts of capital are employed with one unit of labor.

In the below fig 1 ray through origin is the function nr the other curves function sF(r,1) which shows diminishing mu of capital. At the point of intersection of the two curves nr sF (r, 1) and r=o

Here K/I is a constant and capital stock must expert at same rate of labor force

Growth pattern 2

In Fig 2 the productivity curve sF(r,1) intersects the curve nr at three points r₁,r_2, r₃ .

Here r₁, and r₃, are stable equilibrium positions because the total productivity curve is above nr but at r₂ it is below nr and it is unstable.

Growth pattern 3

In Fig 3 the ray nr depicts equilibrium path where warranted and natural growth rates are equal the curve sF'(r1) which is above nr represents a highly productive system in which capital and income increase more rapidly than the labor supply thn this system, which is of perpetual full employment, income and saving increase so much that the capital labor ratio increase limitlessly on the other hand curve S2 F (r,1) depicts highly unproductive system in which the full employment path leads to ever diminishing per capital

Summary

Professor Solow conclusion of his model is " when production takes place under the usual neo-classical conditions of variable proportions and constant returns to scale, no simple opposition between natural and warranted growth rates is possible. There may not be any knife edge. The system can adjust to any given rate of growth of the labor force, and eventually approach a state of steady proportional expansion.

Critical appraisal

· The Solow model is a major improvement over the Harrod-Domar model as in H-D model there is a knife edge and is any of the used parameters change a bit consequence would be chronic inflation or unemployment.

· While assumption of substitutability between labor and capital gives the growth process an adjustability and problem of Knife edge does not arise.

Please use this google drive link to download the answer file.       

answer 2.https://drive.google.com/file/d/1fnsECutVl6quebCI3deZUwQYmQh5uCi_/view?usp=sharing

answer 3.https://drive.google.com/file/d/14mmv_CJ0Lospb7zmT9Cv2JPXYSMk6KVl/view?usp=sharing

Note: If you have any trouble in viewing/downloading the answer from the given link, please use this below guide to understand the whole process. 

https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link 

3) PART-A :-

• The graph shows that when new method of rubber processing discovered,it increases the input. So, it shifts to the rightward. Rightward shift is caused when resources of the economy grow due to any new discovery, new equipment etc. As it profits the company make it shift to the rightward.

• PART-B :-
• the above graph shows the decrease in production of rubber bands due to loss interest by the company. As when the production of one product decreases, the other increases as company can now focus on the production of single product. Assume that production of rubber bands decrease to 120 it will increase the production of rubber hoses to 100. The rubber hoses will be efficient at 100 perfectly.
• It will change the curve A new curve shown above.

please see the for the link answer 3.

4)P = 10-Q

QA) Q=1, so P*= 10-1 = 9

profit, π= (P-ATC)*Q = (9-1)*1 = 8

CS = .5*(10-9)*1 = .5

QB) Q= 1+1= 2

P*= 10-2= 8

π= (8-1)*1 = 7 : each firm profit

CS = .5*(10-8)*2 = 2

Qc) P*= (10-5) = 5

each firm profit = (5-1)*1= 5

CS = .5*(10-5)*5 = 12.5

d) in long run, P= Min ATC

so P= 1, then total demand Qd = 10-1= 9

so number of firms = Qd/each firm output= 9

each firm profit = 0

Eqm price= 1

CS = .5*(10-1)*9 = 81/2= 40.5

5)Porter's diamond model framework :-

1) Firm strategy ,structure and rivalry

2) Demand conditions

3) Related and supporting industries

4)Factor conditions

This model explains why some companies have competitive and regional advantage by distance marketplace and relative strength.

Porter's diamond model framework for automobile industry in Germany :

Germany produces high end luxury cars having the most competitive edge in the world such as Audi.

As German car market is highly competitive and follows al lthe factors of porter's diamond model such as rivalry, demand conditions , factor conditions, and competitor and supporting industries.

when there 's lot of competitors/competition , this factor keeps the company on toes to come out with more innovative , and better than before products to keep them established in the market.

factors conditions such as the satisfaction and sophisticattion of home buyers. Germans are aware of the world class car industry , the dynamic innovations and worldwide demand for the advanced German technology.

Favourable conditions and supporting industries like proper govt policies in support of the industry , education , skilled labor , climate and infrastructure provides help and support throughout to make the product a success.

In certain parts of Germany,. There's no restriction on speed limit which leads to a more powerful engine demand by the homebuyers. This makes the manufacturing industry produce more powerful engine equipped cars with innovative tech.

Government has also played a major role in creating regional demand and advantage by improving road and building canals a long ago . It also creates and supports funded scientific researches.

All these factors collectively have made German Car industry the most in demand anc can be explained using porter's diamond model.