Managerial Economics

Specific Instructions:

1. As a group, complete the following problem in good form. Use APA throughout.
2. Only the names of group member present should be added
3. Due: Return it to me by email attachment no later than 5:00 PM on Friday, September 6.

1. With respect to the demand for college enrollment, which of the following would cause (1) a movement along the demand curve or (2) a shift of the demand curve? Justify your responses. Use examples to support your answers.

      a.  An increase in incomes.

      b.  Lower tuition.

      c.  More student loans.

      d.  An increase in textbook prices.

• 2.    What would happen in the apple market if the government set a minimum price of $10.00 per apple? What might motivate such a policy? Justify your responses. Use examples to support your answers.

3.  Given the following data on gasoline supply and demand,

(a) What is the equilibrium price?

(b) Suppose the current price is $4.  At this price, how much of a shortage or surplus exists? 

Price per gallon     $5.00   $4.00 $3.00   $2.00   $1.00

Quantity demanded (gallons per day)

Al                                      1          2          3          4          5

Betsy                                 0          1          1          1          2

Casey                                2          2          3          3          4

Daisy                                 1          3          4          4          6

Eddie                                1          2          2          3          5

Market total                      _          _          _          _          _

Price per gallon                 $5.00   $4.00   $3.00   $2.00   $1.00

Quantity supplied (gallons per day)

Firm A                               3          3          2          2          1

Firm B                               7          5          3          3          2

Firm C                               6          4          3          3          1

Firm D                               6          5          3          2          0

Firm E                               4          2          2          2          1

Market total                      _          _          _          _          _

Show all your calculations and organize your work.

• Which curve shifts and in which direction when the following events occur in the domestic car market? Show all your calculations and organize your work.

(a) The U.S. economy falls into a recession.

(b) U.S. autoworkers go on strike.

(c) Imported cars become more expensive.

(d) The price of gasoline increases.

• Use the following data to draw supply and demand curves on the accompanying graph.

Price                                              $8        7          6          5          4          3          2          1

Quantity demanded                        2        3          4          5          6          7          8          9

Quantity supplied                         10        9          8          7          6          5          4          3

(a) What is the equilibrium price?

(b) Suppose the current price is $7.

(i) What kind of disequilibrium situation results?

(ii) How large is this surplus or shortage?

(c) Suppose the current price is $3.

(i) What kind of disequilibrium situation results?

(ii) How large is this surplus or shortage?

Show all your calculations and organize your work.

 

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