Managerial Econmics essay

MANAGERIAL ECONOMICS
INDIVIDUAL ASSIGNMENT
For this Individual Assignment, worth 25% of the final mark, the student must
solve the following exercises:
Problem 1: Elasticity of a straight-line demand curve
For the diagram above answer the following questions:
1.1. What is the price elasticity of demand at points l and k? (15p)
1.2. What is the price elasticity of demand at the point
a) where the demand curve crosses the vertical axis? (5p)
b) where it crosses the horizontal axis? (5p)
1.3. As you move down a straight-line demand curve, what happens to
elasticity? Why? (10p)
1.4. Calculate price elasticity of demand between points (n) and (l) using
the arc method. Does this give the same answer as the point method?
Would it if the demand curve were actually curved? (15p)
Problem 2: Elasticity of the supply curve
Given the following supply schedule:
P 2 4 6 8 10
Q 0 10 20 30 40
2.1. Draw the supply curve. (10p)
2.2. Using the arc method calculate price elasticity of supply (i) between P= 2
and P =4; (ii) between P = 8 and P = 10 (15p)
2.3. Using the point method calculate price elasticity of supply at P = 6. (10p)
2.4. Does the elasticity of the supply curve increase or decrease as P and Q
increase? Why? (15p)
REQUIREMENTS
The work must be uploaded or sent before the due date indicated in the
syllabus.
Please indicate your name and the name of the assignment (in this case
“individual assignment”) in the name of the file you submit with the answers.