The Application of managerial Economics Assignment
Instructions:
You will answer the following 10 questions. Each question is worth 10 points. Show all calculations as partial credit will be given. Thank you and good luck. Dr. G.
#1 question one
Price of steaks Supply of steaks Demand for steaks Shortage/surplus
$25 30 10
20 20 12
15 15 15
10 10 20
5 5 30
- Using the above data please create a supply and demand graph.
- Indicate on the graph the point of market equilibrium
- Complete the last column indicating at each price level whether the market has a surplus or a (shortage) and by what amount?
Page 2 midterm exam
#2-The Road Kill Café, a local restaurant, is contemplating a t-shirt advertising promotion. Monthly sales data from t-shirt shops marketing the “Eat more Squirrel” design indicate that the demand curve for the t shirts can be described as:
Q= 200 – 10P, where Q is t shirt sales and P is price.
- How many t shirt sales could the café sell at $10 each?
- What price would they have to charge to sell 100 t shirts?
#3-
Price change of shoes = 10%
Qty change of shoes purchased = 9%
What is the Elasticity of demand? Is it elastic or inelastic?
Price change of auto’s = 18%
Qty change of auto’s purchased = 20%
What is the Elasticity of Demand? Is it elastic or inelastic
Your income increases by 12%
Your purchases increase by 10%
What is the Elasticity? Is it elastic or inelastic?
Page 3 Midterm exam
#4 In a monopolistic competitive market complete the following.
- Number of buyers
- Number of sellers
- Product type
- Prices
- Advertising
- Industry example
#5 In a monopoly market complete the following.
- Number of buyers
- Number of sellers
- Product type
- Prices
- Advertising
- Industry example
#6.The demand for cruises in the United States is highly cyclical and sensitive to supply and demand conditions in the marketplace. Given these characteristics, describe the effect of each of the following. Indicate whether demand increases or decreases. Briefly explain your answers.
- A decrease in the average price of cruise tickets.
- An increase fear of traveling by air because of terrorist threats.
- A significant rise in advertising by cruise ship operators.
Page 4 midterm exam
#7In a perfect marketplace please complete the following.
- Number of buyers
- Number of sellers
- Product type
- Prices
- Advertising
- Industry example
#8.Given the following data please calculate both the accounting profit and the economic profit or (loss).
- Sales = $750K
- Cost of Goods Sold = $450K
- General & Administrative = $150k
- The Opportunity cost of the three owners foregoing their salaries estimated at $60k each.
#9 In an oligopoly market please complete the following.
- Number of buyers
- Number of sellers
- Product type
- Prices
- Advertising
- Industry example
#10 Please complete the following chart for Marginal Costs and Average Costs
Output Total Costs Marginal Costs Average Costs
Unit 1 $100
Unit 2 $110
Unit 3 $130
Unit 4 $165