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Managerial Economics: Assessments 1 & 2 (Coursework Sample)

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This is one of my sample coursework in economics. Kindly you can review the paper.

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Managerial Economics: Assessments 1 & 2
Assessment 1
Qs 1
Technological improvement has surpassed the increase in willingness and ability to purchase a laptop. This is due to advanced technology which has been witnessed over the last few years. The price and quantity in the market for personal laptop can change depending on the point of intersection of the demand and supply curve. This means that, the equilibrium quantity and price for the laptop will be determined by the point of intersection of the two curves. When the supply of the laptops is high (due to increased technology) then the demand for the same commodity tends to go down. Demand and supply acts hand in hand for any particular commodity. On the reverse we may expect that, when the demand is too high the supply tends to go down and the price goes high. Owing this in mind, we expect that due to advanced technology the companies that manufacture laptops will produce them in large quantities. This triggers a rise in supply hence making demand to go down. As supply increases and demand of the laptop decreases, the price on the other hand decreases. This is illustrated by figure 1 shown below.
 INCLUDEPICTURE "http://media.wiley.com/Lux/83/244383.image0.jpg" \* MERGEFORMATINET 
Fig 1
Qs 2
If the income elasticity of demand of a good X is 0.89, then the equilibrium price, if there is an increase in the income of consumers will respond positively. This means that since the income of elasticity demand is positive then the demand due to increased income will also be positive; the demand of good X will increase. The demand for this good is however inelastic since it is less than 1. By this we mean that, the demand does not respond so much to the price changes. Increase in the customer’s income means increased purchasing power. This phenomenon can be explained further by the graph shown below (fig 2.)
 INCLUDEPICTURE "http://3.bp.blogspot.com/-sq5bOczST5U/T0tZlmK_klI/AAAAAAAAAeI/pfX3UGyHFOU/s320/increase+in+income.png" \* MERGEFORMATINET  Fig 2
From the above figure, as the demand curve moves to the right, there won’t be any equilibrium at that given price and quantity. On the other hand a time comes whereby the new demand curve intersects the original supply curve (P2 and Q2); this shows an increase in both due to increased income.
Qs 3
When the ministry of labor sets up a minimum wage in the labor market, then the potential effect on employment will be positive. This means that if we go by the prevailing market price of goods and service, increment in the minimum wages will mean more purchasing power for goods and services. More people will be willing to work as the market wage increases. The minimum wage becomes a crucial factor in the rigidity of the labor market and so raising it means more employment, a factor that helps to reduce poverty in a country. The impacts to the economy are positive since any small loss of job becomes covered by the multiplier effect because more money is put to the hands of the workers consequently unleashing confined consumption, though with some effects of inflation to the economy.
Fig 3
 INCLUDEPICTURE "/research/commentary/2007/0501fig2.gif" \* MERGEFORMATINET 

Qs 4
The table below shows the costs at different outputs and calculation of the marginal cost at level 5 units
Table 1
Output QTotal cost TCFixed cost FCVariable cost VCAverage variable cost AVCAverage total cost ATC1200050015001500200022500500200010001250328008002000666.6933.3433001300200050082554000200020004008006480028002000333.38007600040002000285857
When the marginal cost is 5 units,
Then marginal cost (1 to 5) = total cost of producing 5 units – total cost of producing 1 unit = 4000 – 2000 = 2000
Marginal cost (5 to 2) = 4000 – 2500 = 1500
Marginal cost (5 to 3) = 4000 – 2800 = 1200
Marginal cost (5 to 4) = 4000 – 3300 = 700
Qs 5
According to the posting from last fall, sales for products such as spam, pancake mixes, instant potatoes, rice and beans have been booming during the recession; a spokesperson in a grocery chain is quoted saying “they are real belly fillers.” From this comment and the concept of elasticity, we know that elasticity measures the changes in both demand and supply. It measures the consumer’s sensitivity to changes in price. If in this case the price of a commodity goes down then the demand for the same goes high. On the other side whenever a substitute exists for a certain product with fewer prices, then we expect that the demand for the substitute will go high. Furthermore, if the income for consumers goes high then they tend to spend much on that particular product. More over time can be accounted as another determinant of price elasticity of products. For food products, a customer may prefer to take snacks because they are readily available and easy to eat unlike other solid foods. For our case here the business for the spam, pancake mixes, instant potatoes, rice and beans may tend to be booming during the time of recession because of the above mentioned factors. Consumers may tend to go for them because they are cheap as compared to other food stuffs. They may act as substitutes for other food products like beef and other expensive foods. Their demand triggers high sales hence the business turns to be booming. On the other side these food stuffs are fast foods and readily available. To this effect the consumers may prefer them for other foods to save time.
Qs 6
If RTA increases bus fare from Abu Dhabi to Dubai, there is a likelihood of the commuter company to increase its revenue if there are no substitutes for travelling between the two terminal points. Howev...
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