3rd Posttest in Managerial Economics
Quantitative Demand Analysis
Instructor: Raymond S. Pacaldo, CPA, MSA
General Directions:
I. The exam is good for 1 hour only
II. FINAL ANSWERS must be written in a 1 whole sheet
of paper. Capture a clear image and submit through
Edmodo.
Case 1. Several years ago, the National Association of
Broadcasters imposed restrictions on the amount of nonprogram
material (commercials) that could be aired during children's
television shows, effectively reducing the quantity of advertising
allowed during children's viewing hours by 33 percent. Within four
months, the price of a minute of advertising on network television
increased by roughly 14 percent.
Case 2. A study sponsored by the Philippine Medical Association
suggests that the absolute value of the own price elasticity for
surgical procedures is smaller than that for the own price elasticity
for office visits.
Case 3. The demand function for DVD players has been estimated
to be QPlayer = 134 - 1.07PDVD + 46Pm - 2.1PDVD - 5M, where QPlayer
is the quantity of DVD players, PDVD is the price of a videocassette,
Pm is the price of a movie, PPlayer is the price of a DVD player, and
M is income.
Case 4. When the price of butter was "low," consumers spent P5
billion annually on its consumption. When the price doubled,
consumer expenditures increased to P7 billion. Recently you read
that this means that the demand curve for butter is upward sloping.
Case 5. The following estimates have been obtained for the market
demand for cereal: ln Q = 9.01 - 0.68 ln P + 0.75 ln A - 1.3 ln M,
where Q is the quantity of cereal, P is the price of cereal, A is the
level of advertising, and M is income.
Case 6. A consumer spends all her income on only one good.
Case 7. The demand for company X's product is given by Q x = 12
- 3Px + 4Py. Suppose good X sells for P3.00 per unit and good Y
sells for P1.50 per unit.
END
4th Posttest in Managerial Economics
Theory of Individual Behavior
Instructor: Raymond S. Pacaldo, CPA, MSA
General Directions:
I. The exam is good for 1 hour only
II. FINAL ANSWERS must be written in a 1 whole sheet
of paper. Capture a clear image and submit through
Edmodo.
Case 1. Using the figure below, a consumer is initially in
equilibrium at point C. The consumer’s income is P400, and the
budget line through point C is given by P400 = P100X + P200Y.
When the consumer is given a P100 gift certificate that is good
only at store X, she moves to a new equilibrium at point D.
Case 2. It is common for supermarkets to carry both generic
(store-label) and brand name (producer-label) varieties of sugar
and other products. Many consumers view these products as
perfect substitutes, meaning that consumers are always willing to
substitute a constant proportion of the store brand for the producer
brand. Consider a consumer who is always willing to substitute
four pounds of a generic store-brand sugar for two pounds of a
brand-name sugar.
Case 3. When trying to assess differences in her customers,
Claire—the owner of Claire’s Rose Boutique—noticed a
difference between the typical demand of her female versus her
male customers. In particular, she found her female customers
to be more price sensitive in general. After conducting some
sales analysis, she determined that her female customers have
the following demand curve for roses: QF = 24 - 2P. Here, QF is
the quantity of roses demanded by a female customer, and P is
the price charged per rose. She determined that her male
customers have the following demand curve for roses: QM = 27
- P. Here, QM is the quantity of roses demanded by a male
customer.
Case 4. A recent newspaper circular advertised the following
special on tires: “Buy three, get the fourth tire for free—limit
one free tire per customer.”
END