Explain the definition and assumptions of law of demand

Assignment Help Managerial Economics

Reference no: EM132356956 , Length: word count:200

1. Why managers need to know economics? Explain the importance of managerial economics.

2. Explain the definition and assumptions of law of demand. Discuss also the Exceptional cases paradoxical to the law of demand

3. What are the factors, which determine the demand of a commodity? Explain.

4. Show the effect of the following on equilibrium price and Quantity demanded.

Demand decrease while supply is constant.
Supply increase while demand is constant.
Supply decreases while demand remain fixed.
Both demand and supply increase or decrease simultaneously.
Price floor and price ceiling.

5. Explain the following concept of supply:

i. Law of supply (support by supply schedule, supply function and supply curve using hypothetical data)
ii. Market supply
Iii.Determinants of supply
iv. Elasticity of supply: Price elasticity of supply, and its type based on its value

6. Explain the concepts of arc and point elasticity of the demand curve for a commodity. When the use of Arc elasticity matters?

7. From the demand function Q = 600/P, show that the total revenue on the commodity remains unchanged as price falls. Estimate elasticity of demand along the demand curve at P = 4birr and P = 2 birr

8. Suppose the demand function for a good is given as QD=200-2P+4Pr+8M

Where QD=quantitydemand Pr = price of related goods
P=price of the good M= income of the consumer
And further it is given that P = 10; Pr = 15 and M=100 Then

a. Calculate the point price elasticity of demand
b. Calculate the income elasticity of and identify the nature of the good
c. Calculate cross price elasticity and identify the nature of relationship between the two goods

9. An Economic Research Centre has published data on the Gross Domestic Product (GDP) and the Demand for refrigerators as presented below:

Year	2006	2007	2008	2009	2010	20011	2012	2013	2014
Refrigerator	96	109	91	99	105	108
GDP (Y)	4.3	4.1	3.6	4.2	4.1	3.9

A). Estimate the regression equation, R = a + bY where R = refrigerators (in millions), and Y = GDP (in billions)

B). Forecast the demand for refrigerators for the years 2006, 2007, and 2008, if the Research centre projected the GDP for 2012, 2013, and 2014 to be 4.5 billion, 5 billion, and 3 billion, Respectively

10. "Isoquant curves do not intersect each other" is the one among properties of well behaved isoquant curves. Explain the implication of this property with supplementary graphical representation.

Reference no: EM132356956

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