Economics for Managers (ECO 511) Assignment - University Name

This economics assignment explores several key concepts in microeconomics relevant to managerial decision-making. The first question analyzes the competitive relationship between Lego and Disney, requiring students to define the products and target consumers of each company. The second question involves a numerical problem where Adam has a fixed budget and must allocate it between apples and bananas, requiring the creation of budget lines and demonstrating how changes in prices affect consumer choices. The third question delves into the economic concepts of 'preference completeness' and 'preference transitivity,' explaining how these concepts relate to consumer behavior and decision-making in economics. The solution provides detailed answers, graphs, and explanations to illustrate the concepts.

Running head: ECONOMICS FOR MANAGERS
Economics for managers
Name of the student
Name of the University
Author Note

1ECONOMICS FOR MANAGERS
Table of Contents
Answer 1:...................................................................................................................................2
Answer 2:...................................................................................................................................2
Answer 3:...................................................................................................................................5
References:.................................................................................................................................6

2ECONOMICS FOR MANAGERS
Answer 1:
Lego manufactures plastic toys, produced under the Lego Group. Some special products of
this company are mini-figures, interlocking plastic bricks and other parts of toys. On the other side,
Disney is a multinational entertainment and mass media conglomerate. The company has created
various animated characters like Miki Mouse and Mini Mouse for people of all age group (Hennig-
Thurau and Houston 2019). Thus, Lego and Disney are not competitors. Rather, Lego operates as the
partner of Disney, as it receives franchises to produce various Disney toys and games. The mission of
Disney is to the leading producers as well as providers of information and entertainment (Danciu
2016). Thus, it intends to attract boys and girls, aged between 4 years to 12 years. Moreover, teenage
children are also considered as the chief customers of this company. Lego also manufactures products
for the same range of customers.
Answer 2:
Adam’s budget line is:
50 = 2 * Apple + 1 * Banana
In this context, income of Adam is 50 while price of one unit apple is 2 and price of one unit
banana is 1 (Cherchye, Demuynck and De Rock 2014).

3ECONOMICS FOR MANAGERS
(0, 25)
(50, 0)
Apple
Banana
O
(0, 25)
(50, 0)
Apple
Banana
O
(10, 0)
D0D1
a.
b.
New budget equation of Adam is:
50 = 2* Apple + 5 * banana
Figure 1: Budget line of Adam

4ECONOMICS FOR MANAGERS
(0, 25)
(50, 0)
Apple
Banana
O
(0, 50)
(5, 0)
D0D1
After increase in price of banana, the budget line of Adam shifts from D0 to D1 towards left.
This implies that Adam will purchase banana by less amount than before.
c.
The second new budget equation of Adam is:
50 = 1 * Apple + 10 * banana
Therefore, the new budget line of Adam is:
After price increase of apple and decrease in price of apple, Adam will buy more apples and fewer
amounts of bananas.
d.
New budget line of Adam is:
250 = 10A + 5 B
Figure 2: Shift of Demand curve
Figure 3: Budget shifting of Adam

5ECONOMICS FOR MANAGERS
(0, 25)
(50, 0)
Apple
Banana
O
(0, 50)
D0
The new budget line is same as initial one. Income of the person increases while at the same
time price of apple and banana change.
Answer 3:
a.
In economics, the term “preference to be complete” is related with consumer behaviour. In
this context, it is assumed that each person has a preference on any two bundles of goods. Within
these two set of goods, the consumer can easily rank them based on preferences (Gordon and
Vaughan 2017). Thus, this preference of consumer can be defined completely. In this context,
consumer can prefer either A to B or B to A or both.
B.
The term “preferences to be transitive” represents the preference property of an individual.
This implies that one bundle, say A, is preferred compare to other, say B. Moreover, A is always
preferred to other bundle, C. Therefore, A is preferred strictly.
Figure 4: New budget line of Adam

6ECONOMICS FOR MANAGERS
References:
Cherchye, L., Demuynck, T. and De Rock, B., 2014. Revealed preference analysis for convex
rationalizations on nonlinear budget sets. Journal of economic theory, 152, pp.224-236.
Danciu, V., 2016. Corporate Reputation: How it Works for Company's Performance. Romanian
Economic Journal, 19(62).
Gordon, D. and Vaughan, R., 2017. Thick Indifference Curves, Marketing and Behavioral
Economics. Journal of Progressive Research in Social Sciences, 6(1), pp.422-425.
Hennig-Thurau, T. and Houston, M.B., 2019. Creating Value, Making Money: Essential Business
Models for Entertainment Products. In Entertainment Science (pp. 151-231). Springer, Cham.