Managerial Economics Assignment

QUESTION 1

Given the demand function for iPhone of the form;

Qx = 2400 - 1 Px - 1 Py + 4Pz + 1 M

3 5 8

Price of good X is given by $3,000, prices of related goods are given by Py = $100,

Pz = $2,000 and income of consumers is given by $24,000

(a) Compute the cross elasticities between goods X and Y, X and Z and determine the types of goods using the computed values.

(b) Calculate the price and income elasticities and indicate the type of demand and good respectively

(c) What is the importance of the income elasticity computed in (b) to the producer?

QUESTION 2

Price ($) Quantity demanded (boxes) Quantity supplied (boxes)

1 200 110

2 175 130

3 150 150

4 125 170

5 100 190

The table above shows the demand and supply schedules for perk biscuit.

a. What is the market equilibrium in the biscuit market?

b. Describe the situation in the biscuit market if the price were $4 a box

c. If the price is $4 a box, explain how the market reaches equilibrium

d. Describe the situation in the biscuit market if the price were $2 a box.