Students must mention the question number clearly in their answers.

Students must mention the question number clearly in their answers.

Avoid plagiarism.

All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

Q1: Illustrate an example of your choice and discuss consumer surplus, producer surplus, Total surplus, and deadweight loss with the help of the graphs.

Q2: Calculate the consumer surplus, producer surplus, and total surplus in a market of airplane tickets if the Equilibrium price per ticket is SAR 160, the equilibrium Quantity is 80 tickets, the upper intercept of the demand curve on the y-axis is SAR 400 and lower intercept of the supply curve on the y-axis is zero. What will be the dead weight loss if the government imposes a tax of SAR 80 per ticket and the buyer and sellers share the tax of 50 percent each?

Q3: What do you mean by import tariff and import quota? Take an example and discuss the difference between tariffs and quotas with the help of graphs.

Q4: Provide the equation to calculate the GDP of a nation. Explain all four factors that contribute to the GDP calculation in detail.

Q2: to calculate only “Consumer, Producer, and Total Surplus” in the 2nd question of Assignment -2. There is no need to calculate deadweight loss after Tax.

Textbook:

Mankiw, N. Gregory. Principles of Macroeconomics, 6th ed. Mason, OH: South-Western Cengage Learning, 2011. ISBN: 9780538453066 (hard copy); ISBN: 9781115468523 (eBook)