Managerial Economics Case Study

1. When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. In this range of prices, demand for this product is ( )

4) Use cubic regression to determine an equation for the data (or lwh where (12 – x) represents the sides and (x) represents the height of the box).

Using the simulation as a guide the price elasticity of demand is reviewed to determine the effects of pricing strategies. Demand can either decrease or increase based on price of a product or service (Colander, 2010). Consumers tend to buy products were there is a decrease in price (Colander, 2010).

2. When the percentage change in the quantity demanded equals the percentage change in price, then demand is

The fact that price and quantity demanded are related negatively illustrates the a.law of supply.b.law of quantity supply.c.law of demand.d.law of quantity demanded.e.point that some facts are unobservable. ANS

MUx/Px equals 40/4= 10 < 15 = 30/2 = MUy/Py The consumer should decrease consumption of X. 4+2=6/2= 3 X is $1 less than an increase Y is $1 more than X works out to be

4) The purpose of the committee is to find the best possible solution to tackle the financial crises faced by the university. However, it is not something that is guaranteed to be accepted by the President. The president will consider the report of the committee as the solution to the financial crises but the president does have the power to override, make suggestions or modify the solution as he see fits. It was wise to appoint her assistants as the vice provosts, to the task force to ensure that the president had easy access to information and minutes of the meetings. While the intent is to lower the cost of fringe benefits, the president does not want to

Therefore the demand for the low-calorie microwavable food is inelastic. An increase in the price of the food will cause a decrease in quantity demanded. Income elasticity of the goods calculated is 1.08, which means that the good selected is a luxury good. Changes in income could also affect the demand of this product. The cross price elasticity is 0.005. Therefore the two goods can be considered as neutral goods. The advertisement elasticity is 0.08. This indicates that advertisement has an important impact on the sales of the product. Lastly, the microwave ovens elasticity is 0.05. This is a direct correlation as sales of microwave ovens increase; demand for of low-calorie microwavable food also increases.

This causes the price and the quantity move in opposite directions in a supply curve shift. Also, if the quantity supplied decreases at any given price the opposite will happen.

Airlines are currently being investigated for deliberately sharing business decisions with one another. It is legal for companies to limit the amount of product they make available to consumers, but if the companies involved work together to do this, it is illegal. (Washington Post) It causes prices to go up. This is why the airlines are under scrutiny at this moment. Since , in the past, there was evidence of collusion, the airlines have made themselves more likely for this type of investigation. In the long run, such scrutiny on a company can be a good thing. It keeps them honest, in a sense, knowing that a step out of line will cost them tremendous amounts of money.

Company operates in the Industrial Sector – Services, and Industry – Regional Airlines. According to the Standard Industrial Classification System (SIC), company belongs to the industry group 451: Air

|5000 employees at the beginning of the 1990s, it has grown to exports of $70 billion and 2.8 million employees today, and a globally dominating |

When price elasticity of demand is elastic, the coefficient will be greater than one. When a percent price change occurs quantity demanded responds strongly there will be a large change in quantities consumers purchase. There is price sensitive in this scenario. If price elasticity of demanded is inelastic the coefficient will be less than one. When a percent price change occurs quantity demanded does not respond strongly then there is a slight change in quantities consumers will purchase. There a weak price sensitive in this scenario. Lastly, if price elasticity of demanded is unit elastic the coefficient will be equal to one. Whenever there is a percent change in price there is an equally matched percent change in quantity demanded. This scenario is rare.

The key point is to distinguish between demand (the relationship) and quantity demanded. That distinction is important for microeconomics, although people often do not make it in ordinary discussion.

Using appropriate diagrams, discuss how an increase or an improvement in the following non-price determinants of supply would change equilibrium prices and quantities.