Ecs2601 assignment 1
Semester 01 2025
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
, Question 1
1.1 Assumption 1: More is Better than Less
For example, when purchasing a new smartphone, consumers often prefer the 64GB model
over the 32GB model if they are priced the same. The preference is due to the greater storage
capacity, which makes more storage perceived as better.
Assumption 2: Completeness
An example of completeness can be seen when choosing between two dinner options at a
restaurant:
Option A: Grilled chicken with vegetables
Option B: Grilled salmon with rice
A consumer demonstrates completeness if they can compare the two options and decide on a
preference, indicating they have a clear preference between the two.
1.2 Utility Maximization
To achieve maximum satisfaction, a consumer’s willingness to trade one good for another
(marginal rate of substitution or MRS) must align with the price ratio of the goods in the
market.
1.3
• Cross Price Elasticity of Demand: The percentage change in the quantity demanded
of one good when the price of another good increases by 1%.
• Price Elasticity of Supply: The percentage change in the quantity supplied when the
price of the good increases by 1%.
1.4
• Printers and Ink Cartridges
Semester 01 2025
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
book exam on WhatsApp 0645167275
, Question 1
1.1 Assumption 1: More is Better than Less
For example, when purchasing a new smartphone, consumers often prefer the 64GB model
over the 32GB model if they are priced the same. The preference is due to the greater storage
capacity, which makes more storage perceived as better.
Assumption 2: Completeness
An example of completeness can be seen when choosing between two dinner options at a
restaurant:
Option A: Grilled chicken with vegetables
Option B: Grilled salmon with rice
A consumer demonstrates completeness if they can compare the two options and decide on a
preference, indicating they have a clear preference between the two.
1.2 Utility Maximization
To achieve maximum satisfaction, a consumer’s willingness to trade one good for another
(marginal rate of substitution or MRS) must align with the price ratio of the goods in the
market.
1.3
• Cross Price Elasticity of Demand: The percentage change in the quantity demanded
of one good when the price of another good increases by 1%.
• Price Elasticity of Supply: The percentage change in the quantity supplied when the
price of the good increases by 1%.
1.4
• Printers and Ink Cartridges
