Written Paper - 1 MBA 532: Managerial Economics By Taranpreet Singh Jaggi Wagiha Taylor July, 2010 Managerial Economics is branch of economics that apply micro economics tools like demand and cost, monopoly and competition, the allocation of resources, and economic tradeoffs to help managers in taking better decisions. Managerial economics is the science of directing scarce resources to manage effectively. These may be decisions with regard to customers, suppliers
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Demand Estimation Managerial Economics & Globalization – ECO 550 Dr. Lundondo Mumeka July 17, 2014 Introduction This assignment is trying to compute the elasticities for each independent variable in a giving regression equation for the demand of a leading brand of low-calorie microwavable food across 26 superstores for the month of April. The linear equation provided is QD = -5200 – 42P + 20 PX + 5.2I + .20A + .25M which suggests that it is dependent on the following variables:
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Introduction Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables: Q = Quantity demanded of 3-pack units P (in cents) = Price of the product = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in
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Demand and Supply: The Basics 21 FUNDAMENTALS OF ECONOMICS FOR BUSINESS - (Second Edition) © World Scientific Publishing Co. Pte. Ltd. http://www.worldscibooks.com/economics/6794.html Chapter 2 Introduction The most basic, and in many ways the most lasting, lesson to be learnt from “Economics 101” relates to the fundamental concepts of demand and supply and their interaction. These are usually presented in a simple graphical format involving demand and supply “curves”. The word is in quotes
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Assignment 1 Demand Estimation Tinisha Wordlaw ECO 550 May 11, 2015 Dr. Wolfson The given regression equation is: QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M. Using the regression equation and from the given values of P = 500, PX = 600, I = 5500, A = 10000 and M = 5000 The quantity demanded can be calculated as: QD = -5200 - 42*500 + 20*600 + 5.2*5500 + 0.2*10000 + 0.25*5000 = 17650 Price elasticity can be calculated from the formula E = (P/Q)*(dQ/dP) We have, (DQ/DP) = -42; Hence
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Concepts Of Elasticity In economics, elasticity is a measure of the response or sensitivity of one economic variable against change in another. Different elasticities of demand measure the responsiveness of quantity demanded to changes in variables which affect demand. i) Price elasticity of demand - Measures the responsiveness of quantity demanded by changes in the price of the good. This is the most common elasticity measurement. The formula used to determine price elasticity is e = (percentage
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Running Head: DEMAND ESTIMATION 1 DEMAND ESTIMATION Name Professor Course Date DEMAND ESTIMATION 1. Elasticities of the independent variables 2 Demand equation is given by: QD = -5,200 – 42P + 20C+ 5.2(I) + 0.2(A) + 0.25(M) 100cents = 1$ P = 500 cents, C = 600cents, I = 550,000cents and A = 1,000,000, M = 5,000 QD = -5,200 – [42 × 500] + [20 × 600] + [5.2 × 550,000] + [0.2 × 1,000,000] + [0.25 × 5,000] QD = -5,200 – 21,000 + 12,000 + 2,860,000 + 200,000 + 1,250 QD = 3
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chapter four Elasticity of Demand and Supply ANSWERS TO END-OF-CHAPTER QUESTIONS 4-1 What is the formula for measuring price elasticity of demand? What does it mean (in terms of relative price and quantity change) if the price elasticity coefficient is less than 1? Equal to 1? Greater than 1? Price elasticity of demand is found by dividing the percentage change in quantity demanded by the percentage change in price. Over a range of prices, we use the midpoint formula:
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factors that play a role in making the most profit. I was told told that elasticities are very important in determining prices and what product to supply, but what does this mean? To start what is elasticities. Elasticity is the measure or ratio of the percentage change in one variable to a change in another. It refers to the change in supply or demand in relation to the change in the price. What is the price elasticity of demand? It compares the percentage of change in the quantity that is demanded
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1. Concept of Demand Schedule: The demand schedule is an illustrative table of the amount of quantity demanded of a particular good at different price levels of the said good. This makes it easy to determine the expected quantity demanded when the good is priced at a particular level. This demand schedule can be graphed as a continuous demand curve on a chart having the Y-axis representing price and the X-axis representing quantity. A demand curve only considers the price-demand relation, other
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