Question

In: Economics

Course Title: Managerial Economics 1. Is managerial economics theory a discipline? Take a position and defend...

Course Title: Managerial Economics

1. Is managerial economics theory a discipline? Take a position and defend it.

2. What is demand? What are two ways to depict a demand schedule?

3. Discuss and explain your answer to the following:

a. As the price of concert tickets rises, what happens to the quantity of tickets that people are willing to buy?

b. As the price of concert tickets rises, explain what happens to the quantity of tickets that people are willing to sell. Explain your answer.

c. If market price is above equilibrium price, explain what happens and why?

d. If market price is below equilibrium price, explain what happens and why?

Expert Solution

1. Managerial Economics is a discipline because it is more practical in nature. If we go by the definition of managerial economics it is defined as 'Synthesis of quantitative mathods and economic models which helps the manager in optimal decision making process'.

Some of the characteristics, will help us in defending it, which are as follows:

i. ME is Normative Science

ii. ME is Pragmatic i.e., Practical

iii. It is prescriptive rather than descriptive. it helps in diagnosing the problem

iv. It takes help of a number of disciplines such as Mathematics, Statistics, Macroeconomics etc.

2. When a consumer is having the desire to buy a particular good or service which is backed up by willingness and ability to pay for it is known as demand.

Demand schedule can be represented Graphically and in a Tabular form.

**Demand Schedule**
Price	Quantity Demanded
$10	5
8	8
6	12
4	18

3. Law of Demand: Higher the price lower the demand, Lower the price higher the demand.

a. when price of tickets will rise: Less will be the demand. Less number of people will be ready to buy ticket of the concert.

b.when price of tickets will rise:More quantity will be Supplied. Due to increase in the price of the concert ticket supplier would be ready to sell more quantity.

c. when Market price is above Equilibrium price it is a case of Price floor and due to this quantity demanded will decline and quantity supplieed will increase. Hence loss to the society will increase.

d. when Market price is below Equilibrium price it is a case of Price ceiling and due to this quantity demanded will increase and quantity supplieed will decrease. As a resultant of this market will not be able to work at its potential hence loss to the society.

Rahul Sunny answered 2 years ago

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