MBAE-103: Managerial Economics – Unit 3
Objectives: define demand and its determinants; explain the Law of Demand & identify differences between Firm’s Demand Curve and Market Demand Curve.
Materials:
The relevant material is available here.
Questions:
- Name any five variables which may be included in the demand function and explain its impact on demand.
- Give three reasons as to why the firm might need accurate demand information.
- What causes a movement along the demand curve and what causes shifts in the demand curve? Explain.
- Punita spends all her money on food and clothing. When the price of clothing decreases she buys more clothing.
- Does the substitution effect cause her to buy more clothing? Explain.
- Does the income effect cause her to buy more clothing? Explain.
- In a world of just two goods where all income is spent on the two goods, both goods cannot be inferior. True or False? Explain.