managerial economics

1. Assume that both the supply of ice creams and the demand for ice creams rise during a particular hot summer but that demand increases more rapidly than supply. What can you conclude about changes in equilibrium price and equilibrium quantity? Sketch (with a Word chart or by hand and then takefinsert a photo) your answer, indicating the shift of each curve. (10 Marks) 2. In an analysis of the market for paint, an economist discovers the facts listed below. State whether each of these changes will affect supply or demand, and in what direction. Explain briey. 21. Due to price ination of chemicals. paint is more costly to produce b. Because of severe hailstorms, many people need to repaint now. c. Paint technology has recently undergone signicant improvements in terms of durability (longer life). d. Cost-cutting technology has made paint cheaper to produce. (15 Marks) 3. What is the impact of the price oor on the production of European wheat? Explain in your own words the characteristics of supply (quantity and price) in this situation. To formulate your answer. consider the global market for wheat and what would be the equilibrium if there were no political subsidies to maintain the price oor in Europe (don't include charts). (10 Marks) 4. The table below shows the amount of savings and borrowing in a market for loans to purchase homes, measured in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the capital nancial market? How can you tell? Now, imagine that because of a shift in the perceptions of foreign investors. the supply curve shifts so that there will be $10 million less supplied at every interest rate. Calculate the new equilibrium intemst rate and quantity and explain why the direction of the interen rate shift makes intuitive sense. ([5 Marks) Interest rate Quantity supplied in Quantity demanded m millions millions In Al Tareeqah Management Studies - 2021 150 125 155