ECO606 Fall 2021: Complete Solution for Assignment 3 – Mathematical Economics 📘

ECO606 Assignment No 3 Solution Autumn 2021-VU-Mathematical Economics

Question No. 1
Quantity demanded of Beef (QB) is a function of the price of beef (PB), price of mutton (PM) and income (Y);
Qb=5200-1.5Pb+2.5Pm+0.25Y

Find out income elasticity of demand for beef if PB = 100, PM = 250, and Y = 5000
Question No. 2

Given the quantity demanded function;
Qd=250-3P+0.05Y

find out price elasticity of demand at P = 25 and income elasticity of demand at Y = 2200.


XYZ Limited has planned the construction of a plant for production at another site. The construction will be required a huge amount. This may also require importing some machinery as well. The following information has been extracted from the balance sheet of XYZ Limited as of 31st December 2020
Outstanding Loans:
Loan A @ 19% p.a Rs. 1,500,000
Loan B @ 15% p.a Rs. 3,500,000
Loan C @ 21% p.a Rs. 2,500,000
Loan A and Loan C were taken at the start of the financial Year 2020 whereas, Loan B was taken on March 31st, 2020. The import duty of Rs. 100,000 also paid after deducting the government subsidy given of Rs. 100,000 on import duty. Other than these expenses, XYZ Company Limited has incurred the following expenditure during the year on plants under
construction
February 01, 2020 500,000
April 30, 2020 700,000
September 30, 2020 1,300,000
Required
Determine the capitalization rate and total cost to be capitalized on the construction of the plant till the date