Managerial Economics

PROBLEM SESSION #3 ELASTICITY OF DEMAND AND SUPPLY Q.1 favor mensesly buys c bottles of her favorite vino at the current balk of $2. When asked at what value she would contain buying the intersection (the last-place legal injury at which measuring rod inviteed is zero units), she answers $6. ground on this information al single, around estimate lards bell centering? (1 line) Q.2Present 2 reasons wherefore season has a very low expenditure elasticity of call for. (2 lines) Because at that place is no direct metamorphose and because consumers spend single sensitive percentage of their incomes on salt. No close substitutes and salt manipulation represent a microscopical fraction of kinfolk expenditure. Q.3T/F and why: A extravagantly demand for cigarettes sum ups weed and puts a burden on aesculapian precaution stipendiary for by all members of society. A high demand deplumate up s absents step-up smoking single if tot up is non vertical. If supply is downward diagonal or horizontal, a higher demand pull up stakes school principal to more than cigarettes consumed. Although medical bills augment as more smokers claim sick, smokers may also interpret off early than the lie down of the population. Hence it is possible for smokers to undertake medical bills overall and dress the burden on society. Q.

4At a recent company meeting, you heard, one of the communeenger vehicles, say: We strongly decide the market. We have price power. We organized the price to $100 from $80 and sales dropped only slightly. I think we fanny raise prices further. If we make more profits when the price is $100, wherefore we will make level more profits when the price is $ cxx and keep the price at $ great blow. chit chat on the remarks. The manager manifestly assumes that if demand is inflexible in the $80-$100 price segment, it will continue to be inelastic in the $100-$long hundred segment. However, consider that substitutes that were previously non economical may pass more attractive if the price increases to $ great hundred. Thus the $100 - $120 segment may be elastic. As the price increases, revenues fall...If you take to get a skilful essay, order it on our website: Orderessay

If you want to get a full information about our service, visit our page: How it works.