Scribd
Upload
187 views2 pages

2) in December, The Price of Christmas Trees Rises and The Quantity of Trees Sold Rises. Is This A Violation of The Law of Demand?

The document contains 11 questions related to business economics concepts including supply and demand curves, price elasticity of demand, indifference curves, income and substitution effects, and marginal revenue. The questions cover illustrating a change in the beef market using supply and demand curves, identifying violations of the law of demand, calculating price elasticity, analyzing changes in total revenue and price elasticity along a demand curve, effects of movement along an indifference curve, factors impacting supply elasticity in the long versus short run, definitions of income and substitution effects, situations where higher prices could increase demand other than Giffen goods, and the impact of price elasticity on a firm's marginal revenue.

Uploaded by

Muhammad Zahid
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
187 views2 pages

2) in December, The Price of Christmas Trees Rises and The Quantity of Trees Sold Rises. Is This A Violation of The Law of Demand?

The document contains 11 questions related to business economics concepts including supply and demand curves, price elasticity of demand, indifference curves, income and substitution effects, and marginal revenue. The questions cover illustrating a change in the beef market using supply and demand curves, identifying violations of the law of demand, calculating price elasticity, analyzing changes in total revenue and price elasticity along a demand curve, effects of movement along an indifference curve, factors impacting supply elasticity in the long versus short run, definitions of income and substitution effects, situations where higher prices could increase demand other than Giffen goods, and the impact of price elasticity on a firm's marginal revenue.

Uploaded by

Muhammad Zahid
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Assignment 1

Business Economics

M1 and M2

1) Beef supplies are sharply reduced because of drought in the beef-raising states, and consumers turn to pork as a substitute for beef. How would you illustrate this change in the beef-market in supply-and-demand terms? (Draw the changes in the supply-demand curves) 2) In December, the price of Christmas trees rises and the quantity of trees sold rises. Is this a violation of the law of demand?

3) If a 12% fall in price leads to a 3% increase in quantity demanded, what is the price elasticity of demand? 4) Brand X sold 500,000 items at 100 each last year. It is known that its price elasticity of demand is -0.5 (calculated at the current price and quantity). What would sales in number of units sold be this year if there are no other changes affecting demand and the price per unit is raised to 110? 5) Assume that the demand curve for a commodity is Qd = 10-P. Using the table below to complete parts a-c (a) Fill in column two, which identifies quantity demanded associated with each price. For example, when price equals 1, Qd = 10 - 1 = 9. (b) Now fill in column three which identifies the revenue that the producer will receive at each price. For example if price equals 1, 9 units will be demanded and hence the firm will receive 9. Comment on how total revenue changes as we move up the demand curve (from Price =0). (c) Calculate the price elasticity at each point on the demand curve. Comment on how price elasticity of demand changes as we move up the demand curve (from Price = 0). (d) If you have a pencil and paper nearby, sketch out the demand curve showing how price elasticity of demand changes as we move along it. Identify the areas on the demand curve for which demand is price elastic, which are price inelastic and the point at which price elasticity = -1 Price () 0 1 2 3 4 5 6 7 8 9 10 9 9 Quantity Demanded Total revenue (PXQ) Price Elasticity of Demand

Instructor: Komal Afzal Rao

6)

Assume that two baskets A and B lie on the same indifference curve. Assume

that basket A contains more of good Y than basket B but less of good X than basket B . As the consumer moves down and to the right (from basket A to basket B ) along his indifference curve, total utility a) increases. b) remains constant. c) decreases.

d) is ambiguous.
7) Why will the supply of houses be relatively more price elastic in the long run than in the short run?

8) Define income effect and substitution effect. *keep your answers short and consise* 8) Other than the giffen good can you think up other situations when an increase in price can still lead to an increase in demand for a commodity? 10) Question no: 3 from chapter 2 *Managerial Economics* By Bruce Allen, Keith Weiglet 11) Find out the effect of price-elasticity on the firms marginal revenue. Pg 44. *Managerial Economics* By Bruce Allen, Keith Weiglet

Instructor: Komal Afzal Rao

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy