Question

Discuss some of the effects of the economic downturn on supply, demand, inferior goods, complimentary goods, substitute goods, and price.

Why is forecasting important to businesses. What type of business forecasting do you think would best suit your line of work? Or describe a forecasting need for a company and discuss how it helps the business. Explain your answer.

Movie theaters, airlines, and many other businesses like to charge customers different prices based on time of the day, age, and purchase dates. Why?

Provide an example of a price discrimination for a good or service that you thought it to unfair. Do you still believe that the discrimination is unjustifiable?

Have you ever been in a situation where there is asymmetric information? In your situation, who had more information, you or someone else? Were you the buyer or seller? What issues or problems resulted from the situation?

Justify your answers, ideas and reasoning by using appropriate examples and references. A typical answer should be more than 200 words but no more than 500 words. In working out your answers to the Discussion Questions, you should choose examples from our text, your own experience or other relevant sources. Credit will be given for references you make to relevant examples from real life situations.

Answer 1

Answer for the first question has been provided :

a) An economic downturn or a recession occurs when economic growth falls , unemployment rises , overall price level starts to fall etc . Now during a recession investors lose confidence in the economy so they invest less . Hence this affects production adversely . Production falls which leads to leftward shift of the supply curve . Aggregate demand in the ecnomy falls due to widespread unemployment . People have lower incomes now , so their demand for inferior goods rises , since they cannot afford high quality goods now . Fall in aggregate demand causes rise of demand for inferior quality and lesser price substitutes . Demand for complimentary goods fall . As for example if due to recession demand for costlier coffee falls , then demand for sugar will also fall but demand for cheaper variant of tea may rise . Income inequality and poverty rises .