Consider an example of the Saudi clothing market; if the supply and demand represented as:

Qs = – 200 + 4p ;Qd = 800 – p

Solve:

Equilibrium price and equilibrium quantity and calculate total revenue?

If there were a price celling equal to 250 SAR per each cloth imposed, calculate the price elasticity of demand? Does this consider elastic, inelastic or unit elastic?Also, calculate the total revenue?

Now consider the shoes market; if the supply and demand is:

i.Qs = -100 + 3p ; Qd = 800 – 6p, calculate the equilibrium price and equilibrium quantity.Also, calculate Total Revenue.

ii.If there were a price celling of 120 SAR imposed per each pair of shoes, calculate the price elasticity of demand? Does the shoes consider elastic, inelastic or inelastic or unit elastic? Also calculate total revenue.

Compare the total revenue for the clothing market and the total revenue you found on the clothing market.Which one of product’s total revenue has been increased after the price have been increase and why?

Recall part a (the cloth market) Calculate the CS & PS.

Now, if the government impose sales tax equal to 12.5% on cloth, what is the CS, PS, government revenue, DWL and show this on the graph?

Without calculation, would you expect to have higher/ lower government revenue and DWL on shoes and why?

Assume that Saudi Arabia produce only two products; Coffee bean and plastic where are the price and quantity produced are:

Year

Coffee bean

Plastic

2018 (base year)

P= 10 SAR

Q= 1,000

P= 5 SAR

Q= 2,000

2019

P= 10 SAR

Q= 1,100

P= 5 SAR

Q= 2,100

2020

P= 12 SAR

Q= 900

P= 6 SAR

Q= 1,900

Calculate GDP deflator for the years 2018, 2019 and 2020.Also, calculate the Nominal and real GDP growth on 2019 & 2020, compare between them by explaining why they are different.Calculate the 2019 & 2020 inflation rates.

Sample Solution

f the various measures that have been used for analyzing performance in the research relating to banking industry, profitability and net interest margin are the most important measures. Profitability is explained as profits generated from multiple products offered by the banks, these include interest income as well as non interest income, while net interest margin gives emphasis on income generated by banks through a more traditional way of business i.e. collecting deposits and granting loans. Banks and financial institutions play a crucial role towards the economic development of a country and have a wide range of implication for an overall sound financial system. Therefore, at a macro economic level a sound and profitable banking system will have the ability to withstand the negative shocks in adverse conditions and this factor will contribute significantly to help to strengthen the financial system. As mentioned earlier, the significance of bank profitability at both a macro and micro economic scale have been made by researchers, bank regulators, economists, academics and bank management to develop substantial interest on the factors that help to determine banks profitability(Athanasoglou et al., 2008). On the other hand it is essential to analyze and conduct a research on the determinants of net interest margin because banks play a crucial role in the distribution and channelling and intermediation of funds in the economy. Intermediation of prices is significant in net interest margin. Therefore, examining the factor that determines and effects interest margin is of double interest. Firstly, from the perspective of social welfare a lower cost of intermediation is enviable, which suggests that banks are in the fore front of economic development of a country. However, alternately this can be true >

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