AE113 Managerial Economics

Analysis, Application and Exploration Week 07

We had just finished the discussion part. Let’s move on to the next higher
level of activity/ies or exercise/s that demonstrate your potential skills/knowledge
of what you have learned.

V. ANALYSIS, APPLICATION AND EXPLORATION

Name: ______________________________ Section: BSAIS- __________________

ACTIVITY 1
(Question for objective 1)
Explain the Common Misperception called “that higher prices lead to “more supply” and that lower prices lead to “less
supply.”

ACTIVITY 2
(Question for objective 2)
Differentiate between:
1. Extension in supply and increase in supply.

2. Contraction in supply and decrease in supply.

 AE113 Managerial Economics
Analysis, Application and Exploration Week 07

ACTIVITY 3
(Question for objective 3)
Marketing Manager has requested for 15% increase in supply of Tractors in the busy season starting next quarter, as
he expects higher prices. Write a letter to him stating how and why, in a short period supply can adjust only partly to
the change in demand. Also emphasize why he should prepare long term demand forecasts to overcome problem
next year.