ECO11 Principles of economics

Task:

Q1 (a). Discuss the factors affecting demand for gold in India. Using the demand and supply model, explain and illustrate graphically the effect of change in demand on market equilibrium price and quantity. 

In your answer make sure you discuss the equilibrating process, and clearly outline the assumptions in discussing the factors affecting price. 

2 (a). Use the influences of price elasticity of demand to analyse whether the demand for ‘gold in India’ is likely to be price elastic or inelastic.

Q2 (b). Based on your analysis in Q2 (a) explain and illustrate graphically what will happen to the total revenue of the gold merchants following an increase in gold prices. 

Q3. Assume that Indian government has imposed tax on gold trading. Discuss how tax creates inefficiency in the market. Further, based on your answer in Q2 (a) explain and illustrate graphically how the burden of tax will be shared between consumers and producers. 

In your answer, make reference to the concepts of consumer and producer surplus 

1. Relevance of your answer to the question (Did you answer the question?) 

2. Did you use a model and graphical representation to analyse the question? 

3. Clarity of expression (Is it written well?) 

4. Logical planning and sequence (Does the argument make sense?) 

5. Did you provide theoretical support for the arguments used? 

6. Was the question answered fully or only in part? 

7. Where appropriate, were sources properly cited and referenced? 

8. Overall presentation, including correct grammar, spelling and punctuation (Is the presentation of professional quality?)