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    Managerial Economics and Policy Spring 2021 Assignment-1: Total Marks-5

    Uploaded by

    Areebah Mateen
    1. The document presents 5 questions regarding managerial economics and policy. It includes supply and demand equations, calculations of equilibrium price and quantity, price elasticity, total revenue, and marginal revenue. 2. Questions involve calculating quantities sold at given prices, prices required to sell given quantities, point and arc elasticities, impacts of price changes on sales according to elasticity coefficients, and revenues under different pricing scenarios. 3. The questions and calculations are meant to demonstrate key concepts in managerial economics including supply and demand equilibrium, revenue optimization, and elasticities.

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    Managerial Economics and Policy Spring 2021 Assignment-1: Total Marks-5

    Uploaded by

    Areebah Mateen
    27 views2 pages
    1. The document presents 5 questions regarding managerial economics and policy. It includes supply and demand equations, calculations of equilibrium price and quantity, price elasticity, total revenue, and marginal revenue. 2. Questions involve calculating quantities sold at given prices, prices required to sell given quantities, point and arc elasticities, impacts of price changes on sales according to elasticity coefficients, and revenues under different pricing scenarios. 3. The questions and calculations are meant to demonstrate key concepts in managerial economics including supply and demand equilibrium, revenue optimization, and elasticities.

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    Assignment 1

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    1. The document presents 5 questions regarding managerial economics and policy. It includes supply and demand equations, calculations of equilibrium price and quantity, price elasticity, total revenue, and marginal revenue. 2. Questions involve calculating quantities sold at given prices, prices required to sell given quantities, point and arc elasticities, impacts of price changes on sales according to elasticity coefficients, and revenues under different pricing scenarios. 3. The questions and calculations are meant to demonstrate key concepts in managerial economics including supply and demand equilibrium, revenue optimization, and elasticities.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views2 pages

    Managerial Economics and Policy Spring 2021 Assignment-1: Total Marks-5

    Uploaded by

    Areebah Mateen
    1. The document presents 5 questions regarding managerial economics and policy. It includes supply and demand equations, calculations of equilibrium price and quantity, price elasticity, total revenue, and marginal revenue. 2. Questions involve calculating quantities sold at given prices, prices required to sell given quantities, point and arc elasticities, impacts of price changes on sales according to elasticity coefficients, and revenues under different pricing scenarios. 3. The questions and calculations are meant to demonstrate key concepts in managerial economics including supply and demand equilibrium, revenue optimization, and elasticities.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Managerial Economics and Policy

    Spring 2021
    Assignment-1

    Total Marks-5

    Q1. The following relations describe the supply and demand for posters.
    QD = 65,000 - 10,000P and QS = -35,000 + 15,000P where Q is the quantity and P is the
    price of
    a poster, in dollars.

    a. Complete the following table.

    b. What is the equilibrium price?

    Q2. ABC Co, a store that sells various types of sports clothing and other sports items, is
    planning to introduce a new design of Arizona Diamondbacks’ baseball caps. A
    consultant has
    estimated the demand curve to be Q = 2,000 - 100P
    where Q is cap sales and P is price.

    a. How many caps could ABC sell at $6 each?


    b. How much would the price have to be to sell 1,800 caps?
    c. Suppose ABC were to use the caps as a promotion. How many caps could ABC give
    away free?
    d. At what price would no caps be sold?
    e. Calculate the point price elasticity of demand at a price of $6.

    Q2. Mr. Haris has the following demand equation for a certain product: Q = 30 - 2P.

    a. At a price of $7, what is the point elasticity?


    b. Between prices of $5 and $6, what is the arc elasticity?
    c. If the market is made up of 100 individuals with demand curves identical to Mr.
    Smith’s,
    what will be the point and arc elasticity for the conditions specified in parts a and b?
    Q3. The ABC Co. manufactures digital clock radios and sells on average 3,000 units monthly
    at $25
    each to retail stores. Its closest competitor produces a similar type of radio that sells for
    $28.

    a. If the demand for ABC’s product has an elasticity coefficient of −3, how many will it
    sell
    per month if the price is lowered to $22?
    b. The competitor decreases its price to $24. If cross-price elasticity between the two
    radios
    is 0.3, what will ABC’s monthly sales be?

    Q4. According to a study, the price elasticity of shoes in the United States is 0.7, and the
    income elasticity is 0.9.

    a. Would you suggest that the Brown Shoe Company cut its prices to increase its
    revenue?
    b. What would be expected to happen to the total quantity of shoes sold in the country
    if
    incomes rise by 10 percent?

    Q5. The demand curve for product a is given as Q = 2000 - 20P.

    a. How many units will be sold at $10?


    b. At what price would 2,000 units be sold? 0 units? 1,500?
    c. Write equations for total revenue and marginal revenue (in terms of Q).
    d. What will be the total revenue at a price of $70? What will be the marginal revenue?
    e. What is the point elasticity at a price of $70?
    f. If price were to decrease to $60, what would total revenue, marginal revenue, and
    point
    elasticity be now?
    g. At what price would elasticity be unitary?

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