Mba 640 Managerial Economics

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MBA 640 (Summer IS 2010) MANAGERIAL ECONOMICS EXAM #1 STUDENT NAME: Exam is open book and open material. 1. Explain the interaction of Managerial Economics with other business disciplines, giving specific examples. Managerial economics has been defined by conventional theorists as a science that "is all about how people make choices" After you’ve defined managerial economics and it’s relationship to its economic theory. Managerial economics will interact with each of these business’s disciplines at some point or another; demand, marketing, finance, accounting, management science and strategy. An example of one of the disciplines (demand or price elasticity): Ford and Honda cater to the subcompact segment (marketing…show more content…
A change in demand means that the amount consumers are willing and able to buy changes at each and every price. This affects your supply demands. When demand is high the price becomes low and vice/versa. 6. Define market equilibrium and briefly explain how knowledge of this factor can facilitate the organizational decision making process. Market equilibrium occurs where quantity supplied equals quantity demanded. An increase of supply or overproduction will facilitate a price decrease and the number of quantity produced to rise. A decrease of supply affects the equilibrium price to rise and the quantity to fall. When supply increases and demand remains constant, price falls and quantity sold rises. A decrease in supply and the demand remains constant, causes price to rise and quantity sold to fall. This knowledge of equilibrium/disequilibrium can help an organization determine marketing decisions. Continue production, price change, or get rid of this market. 7. How does the impact of supply and demand influence the Pricing of goods and services? Because supply and demand plays a critical role in today’s economy, it 's important to understand how they both operate - and how you can use them to analyze decisions about the pricing of goods and services provided. My Father once told me a story and said;” I lost $40,000 dollars today”! I said,” You did? How”? He replied,
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