University Managerial Economics Assignment Solutions and Analysis

This document presents solutions to a managerial economics assignment, covering a range of topics. The assignment includes answers to multiple-choice questions and problems related to demand functions, market equilibrium, and elasticity. The solutions address concepts like the impact of price changes on market quantity, identifying whether goods are inferior, and calculating elasticities with respect to price, advertising expenditure, and income. The document includes numerical examples, calculations, and interpretations of the results, providing a comprehensive analysis of economic principles within a managerial context. The assignment also explores the relationships between various economic factors and their impact on demand, such as the analysis of substitute goods and the effects of changes in income and advertising on demand.

Running head: MANAGERIAL ECONOMICS
Managerial Economics
Name of the Student
Name of the University
Course ID

1MANAGERIAL ECONOMICS
Table of Contents
Answer 1..........................................................................................................................................3
Answer 2..........................................................................................................................................3
Answer 3..........................................................................................................................................3
Answer 4..........................................................................................................................................3
Answer 5..........................................................................................................................................3
Answer 6..........................................................................................................................................3
Answer 7..........................................................................................................................................3
Answer 8..........................................................................................................................................4
Answer 9..........................................................................................................................................4
Answer 10........................................................................................................................................4
Answer 11........................................................................................................................................4
Answer 12........................................................................................................................................4
Answer 13........................................................................................................................................4
Answer 14........................................................................................................................................4
Answer 15........................................................................................................................................4
Answer 16........................................................................................................................................5
Answer 17........................................................................................................................................5
Answer 18........................................................................................................................................6
Answer 19........................................................................................................................................6
Answer 20........................................................................................................................................6

2MANAGERIAL ECONOMICS
Answer 1
f. Market quantity must increase and market price must decrease.
Answer 2
then the new equilibrium point is M
Answer 3
Demand function
Q=150−10 P
At P = $2, demand would be
¿ 150− (10 × 2 )
¿ 150−20
¿ 130
Answer 4
a. demand has increased
Answer 5
f. MR = 1.5 – 0.333
Answer 6
4.5
Answer 7

3MANAGERIAL ECONOMICS
e. 20 percent and total expenditures on bread will be unchanged.
Answer 8
a. negative and therefore these goods are inferior goods
Answer 9
1.75
Answer 10
15
Answer 11
3.67
Answer 12
c. increase by 1000
Answer 13
c. decrease by 1750
Answer 14
d. decreases by 450
Answer 15
b. substitute goods

4MANAGERIAL ECONOMICS
Answer 16
Given the demand function
Qg=10000−25 Pg+ 20 Ph+ 30 Pr −15 Pdv−35 Psc −10 Pmm+ 0.05 Ag +0.03 A−25 C+0.1 Y
Given the following values
Pg = $600, Ph= $500, Pr = $500, Pdv = $75, Psc = $200, Pmm = $40, Ag = 20, A = $100,000, C = 3,
Y=$50,000
Estimated demand is
Qg=10000−25 Pg+ 20 Ph+ 30 Pr −15 Pdv −35 Psc −10 Pmm+ 0.05 Ag +0.03 A−25 C+0.1 Y
¿ 10000− ( 25× 600 ) + ( 20 ×500 ) + ( 30 ×500 )− ( 15 ×75 ) − ( 35× 200 )− (10 × 40 ) + ( 0.05 ×20 )+ ( 0.03 ×100000 )− ( 25 × 3
¿ 10000−15000+10000+ 15000−1125−7000−4000+ 1+ 3000−75+5000=19401
Answer 17
The point elasticity of demand with respect to advertising expenditure is
Point elasticity of demand ( E )= ∂ Qg
∂ A × A
Qg
¿ 0.03 × 100,000
19401
¿ 0.03 ×5.15
¿ 0.15
The measure elasticity is less than 1. This implies demand Grapple tablet is not very sensitive
with respect to advertisement expenditure. That means demand is relatively inelastic.

5MANAGERIAL ECONOMICS
Answer 18
Income elasticity of Grapple tablets
E= ∂Qg
∂Y × Y
Qg
¿ 0.1 × 50,000
19401
¿ 0.1 ×2.58
¿ 0.258 0.26
Here again elasticity is less than 1. Hence, demand is relatively less sensitive with respect to
change in income.
Answer 19
W = 10X + 3 X3−10 X2/3+5 X−2
dW
dX =10−9 X2− 20
3 X
−1
3 −10 X−3
Answer 20
X = 5Y− 2Y2 + 10Y-3−3Y
1
3
dX
dY =5−4 Y −30Y −4 −Y
−2
3

6MANAGERIAL ECONOMICS