Economic Assignment 1 answer PDF

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MG 640 – Managerial Economics: Assignment 1 Evans Asamoah Monroe College King Graduate School Instructor: Dr. Ambrose R. Jusu

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MG 640 – Managerial Economics: Assignment 1 Instructor: Dr. Ambrose R. Jusu Answer All Questions. You must be as analytical as possible. 1. The following is the assumed demand schedule for an ice cream consumer in Bronx, New York: Demand Schedule Price Quantity Demanded per Year (thousands of cones) $2.25 $2.00 $1.75 $1.50 $1.25 $1.00

A.

B.

12 16 20 24 28 32

Using the information above, draw a graph showing the consumer’s demand curve for ice cream.

Explain the differences between a change in quantity demanded of ice cream and a change in the demand of ice cream.

ANS#

Change in demand means change in demand due to the factors of demand other than price whereas Change in quantity demanded means change in the quantity purchased due to change in

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the price of a product. Change in demand has no price effect whereas Change in quantity has price effect. When demand of ice-cream changes due to change in the price of ice-cream itself, then it is called change in quantity demanded. It causes movement of demand curve. When demand of ice-cream changes due to change in factors other than price of commodity itself, it is called change in demand. Factors other than price are income of consumer, price of related goods, taste and preference of consumer etc. all causes shifts in curve

C. Would a change in the price of ice cream cause a change in the demand for ice cream? Explain why or why not? ANS#

No Change in price causes change in quantity demanded for ice-cream but not change in demand

2. What are the supply schedule and the supply curve and how are they related? With the help of the supply schedule provided in our last class, derive John’s individual supply schedule. ANS#

A supply schedule is a table that shows positive relationship between quantity supplied and price. It tells us different levels of quantity supplied at various prices. Supply curve is a graphical presentation of supply schedule which illustrates the positive relationship between prices and quantity supplied. Supply curve is derived from supply schedule by plotting the combinations of price and quantity supplied given in the schedule.

John Individual Supply Schedule Price

$5 $4 $3 $2 $1

Quantity Supplied (bottles of Pepsi) 50 40 30 20 10

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