Price of Soft drinks and (4) Location 1 for urban and 0 for otherwise. This data included 30 observations. Table 1.1 Sample Data: The Demand for Pizza | | | | | | | College | Y | X1 | X2 | X3 | X4 | 1 | 10 | 100 | 14 | 100 | 1 | 2 | 12 | 100 | 16 | 95 | 1 | 3 | 13 | 90 | 8 | 110 | 1 | 4 | 14 | 95 | 7 | 90 | 1 | 5 | 9 | 110 | 11 | 100 | 0 | 6 | 8 | 125 | 5 | 100 | 0 | 7 | 4 | 125 | 12 | 125 | 1 | 8 | 3 | 150 | 10 | 150 | 0 | 9 | 15 | 80 | 18 | 100 | 1 | 10 | 12 | 80 |
Premium Supply and demand Statistics Price elasticity of demand
Introduction to Economics Economics: A social science -A study of how people make decisions regarding the allocation of scarce resources to satisfy unlimited wants. Scarcity: Basic problem of Economics -Due to lack of resources (time‚ productive forces‚ etc) some opportunities must be forgone Opportunity cost -Next best alternative forgone when an Economic decision is made Can only forego known alternatives No choices/options will mean no cost Ceteris Paribus: ‘Other things being
Premium Supply and demand
floor/minimum price for a good‚ e.g. rice. (Fig. 1). Price Band for Rice (Fig. 1) P S pmax Price Band pmin D 0. Q If there are good conditions for growing rice one year‚ supply will increase. This will lower the price of rice‚ and possibly causing a surplus‚ where producers produce more than consumers are willing and able to purchase‚ i.e. supply > demand
Premium Government Supply and demand Rice
by the proportional change in price: e = (ΔQd/Qd) / (ΔP/P). Quantity demanded increases from 800 to 1200. Thus the change in quantity demanded‚ ΔQd‚ is (1200 – 800) = 400. To get the proportional change in quantity demanded‚ we have to divide ΔQd by the reference level of Qd. Our rule is to use the average of the beginning and ending values as the reference level. Thus Qd is the average of 1200 and 800‚ which is 1000. If we then divide ΔQd by Qd‚ we have 400/1000 = 0.4. Price decreases from
Premium Supply and demand
Answers to Week 1 MC Problems Chapter 1: Managers‚ Profits‚ and Markets Chapter 3: Marginal analysis for Optimal Decisions the correct answers are marked red. 1 Economic theory is a valuable tool for business decision making because it a. identifies for managers the essential information for making a decision. b. assumes away the problem. c. creates a realistic‚ complex model of the business firm. d. provides an easy solution to complex business problems.
Premium Supply and demand
minimum point of the AVC. 1 b − = 15 = 50 2 2a 1500 Vertex = Another way of verifying this information – the intersection point of MC(q) and AVC(q) AVC(q) = MC(q) 1 2 1 1 1 2 2 1 q − q + 3= q − q +3 1500 15 500 15 2 2 1 1 − q + q =0 1500 15 2 1 q(− q+ ) 1500 15 q = 50 AVC = $1.33 iii) Graph (a) and (b) together with the total cost function. iv) Graph (c)‚ (d)‚ (e) and (f) together‚ and label the intersection point obtained in (ii) (Don’t worry about drawing to scale)
Premium Marginal cost Costs Economics
Chapter 1 Introduction Multiple-Choice Questions 1) The best definition of economics is A) how choices are made under conditions of scarcity. B) how money is used. C) how goods and services are produced. D) how businesses maximize profits. Answer: A Level of Difficulty: Easy 2) Managerial economics is best defined as the economic study of A) how businesses can make the most profits. B) how businesses can decide on the best use of scarce resources
Premium Supply and demand Price elasticity of demand
[international] trade. P 0 1 2 3 4 5 6 7 8 QD 16 14 12 10 8 6 4 2 0 QS -- -- 0 4 8 12 16 20 24 b) If the US now allows free trade and P=$2.00 on the world market and we assume no transportation costs‚ how much cloth will the US consume‚ produce and import with free trade? When the price is 2‚ The cloth will be consumed 12 tons‚ and produced 0 tons. So the U.S. market is shortage and should import (12-0) 12 tons. c) Now
Premium Free trade International trade Tariff
Chapter 7 1) For each of the following graphs‚ identify the firm’s profit-maximizing (or loss minimizing) output. Is each firm making a profit? If not‚ should the firm continue to produce in the short run? In the first graph‚ the firm is losing money‚ but it should not shut down because P > AVC. So the loss minimizing choice is to stay in business in the short run. To shut down would lead to higher losses equal to fixed costs and these losses would be more than the current losses. In the
Premium Economics Microeconomics Supply and demand
small town in Middlesex County‚ NJ. It is located right in the middle of Edison‚ NJ. It is only 2.76 square miles with a population of over 13000. The median income is around $90000. There is approximately 5300 household consisting of 2.56 people. And 30% of the population is under 18 years old (US Census). This can be interpreted as there are mostly families with kids in this community. Currently‚ there are no fast food pizza stores or any other fast food restaurants in the town. Edison does have many
Premium Supply and demand Fast food Price elasticity of demand