microeconomic theory

microeconomic theory Order Description Assignment 1 1. Explain how price and quantity adjust in a market following a demand shock. Use diagram in your answer. (20 marks). Learning Outcome (a) 2. Explain the concept of elasticity of demand in relation to the price of the good or service itself as well as in relation to other factors that determine demand. Also explain how the elasticity of demand varies along most demand curves and how elasticity is related to revenue. Throughout your answers you must use examples of numbers, diagrams and formulae to demonstrate their application. (40 marks). Learning Outcome (b) 3. Discuss the concepts of utility; marginal utility, marginal rate of substitution, budget constraint and constrained utility maximisation in an integrated way using two goods, with diagrammatic and quantitative illustrations (40 marks). Learning Outcome (c) learning outcome (a) Analyse and explain the economic behaviour of individual households and firms within the context of an uncertain environment and limited information. (b) Apply microeconomic theory to the analysis of contemporary issues. (c) Examine the limitations of microeconomic theory in relation to production and consumption issues