Question
Text Book:Keat, Paul G., Young, Philip K. and Erfle, Stephen E. Managerial Economics, Seventh Edition; 2013. Chapter 2:The Firms and its Goals 1. What is
Text Book:Keat, Paul G., Young, Philip K. and Erfle, Stephen E. Managerial Economics, Seventh Edition; 2013.
Chapter 2:The Firms and its Goals
1. What is managerial economics and what are the questions we will try to answer in this course?
2. Why does a firm perform certain functions internally and others through the market? Provide instances of both functions in your work place.
Chapter 3: Supply and Demand
3. What is the difference between shifts in supply vs. changes in quantities supplied?
Chapter 4: Demand Elasticity
4. Assume that a department store was selling a brand of men's dress shirt at $100.00 per shirt. At that price, the store sold 50 shirts in one week. Next week, the store declared a "sale - buy one get one free". As a result, sale of the dress shirt increased to 300 in that week. Based on these information, calculate the price elasticity of demand using the arc elasticity formula (p 70-71 of the textbook). What does the coefficient of elasticity indicate?
5. Define cross-price elasticity of demand. Explain how the sign of the coefficient of cross-price elasticity (positive or negative) indicates if the two goods are substitute goods or complementary goods.
Supplement to Chapter 4
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