mgnt_6005_chapter3(HW)

mgnt_6005_chapter3(HW) - Managerial Economics – 6005...

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Unformatted text preview: Managerial Economics – 6005 Chapter 3 Homework Managerial Economics 6005 Professor Juliet Elu Assignment 2 chapter 3 Spring 2008 Group’s Members: Mohammad Aladalh Joel Njenga Verda Weekes EL Drame Managerial Economics – 6005 Chapter 3 Homework Chapter: 3 Q3.4 The energy Department estimates that the domestic demand for natural gas will grow by more than 40% between now and 2025. a) Distinguish between a demand function and a demand curve. A demand function is the relation between demand and factors influencing its level such as price, income, preference, compliments and number of customers. (P 63) A demand curve on the other hand expresses the relation between the prices charged for a product and the quantity demanded. (P 65) b) What is the difference between a change in the quantity demanded and a shift in the demand curve? A change in quantity demanded refers to the effect on sales of a change in price, all other effects of all other demand determining factors held constant. (P 67) A shift in the demand is a switch from one demand curve to another following a change in a non-price determinant of demand. (P 67) Q3.7 Distinguish between supply function and a supply curve. A supply function for a product is a statement of the relation between the quantity supplied and all factors affecting that quantity namely: price, technology, taxes, subsidy, expectations and number of sellers. (P 70) A supply curve expresses the relation between the price charged and the quantity supplied, holding the effects of all other variables constant. (P 73) What is the difference between a change in the quantity supplied and a shift in the supply curve? Managerial Economics – 6005 Chapter 3 Homework A change in quantity supplied is the movement along a given supply curve reflecting a change in price and quantity. (P 74) A shift in supply curve is a switch from one supply curve to another, indicating a change in one or more non-price variables in the product supply function. (P 75) P3.1 Demand and supply curves. The following relations describe monthly demand and supply conditions in the metropolitan area for recyclable aluminum: Qd = 317,500 - 10,000p (demand) Qs = 2,500 + 7,500p (supply) Where Q is quantity measured in pounds of scrap aluminum and p is price in cents. Price (1) Quantity Quantity Surplus (+) or Supplied (2) Demanded (3) Shortage (-) 4=2-3 $0.15 316,000 3,625 312,375 $0.16 315,900 3,700 312,200 $0.17 315,800 3,775 312,025 $0.18 315,700 3,850 311,850 $0.19 315,600 3,925 311,675 $0.20 315,500 4,000 311,500 P3.3 Demand analysis: The demand for housing is often described as being highly cyclical and very sensitive to housing prices and interest rates. Given these characteristics, describe the effect of each of the following in terms of whether it would increase or decrease the quantity demanded or the demand of housing. Moreover, when price is expressed as a function of quantity, indicate whether the effect of each of the...
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This note was uploaded on 11/13/2011 for the course MIS 4100 taught by Professor Maxnorth during the Spring '11 term at Birmingham-Southern College.

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mgnt_6005_chapter3(HW) - Managerial Economics – 6005...

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