Name: Delgado, Kyla Marie P.
Course&Year: BSA-2
LEARNING TASKS FOR MODULE 2
Fundamentals of Managerial Economics
M2. T1.
A. If the consumers income will increase, the demand for Christmas will increase since it is
a normal good.
B. If the consumers income will decrease, the demand for New Year will increase since it is
an inferior good.
C. If the price of New Year decreases, the demand for Christmas will decrease knowing
that New Year is a substitute for Christmas. So as the price of New Year decreases, the demand
for it will increase.
D. No, New Year isn’t necessarily means a low quality product than Christmas. It does not
mean if the goods was cheaper than the other then it has a low quality, there may be a few, we
can’t deny that but not all. The thing is that inferior goods is associated to the affordability of a
good, and sometimes inferior goods can be a wise choice for buyers. Example, there are two
smartphones, they all have the same features the only difference is their brands. As a buyer, we
need to be practical, we should choose the one that can bring us the same benefit we can get
from the expensive one without spending too much cash.
M2. T2.
A. If the price of inputs of 2021 increases, the cost of producing the good 2022 also
increases. Therefore, the supply of the good 2022 will decrease.
B. If an excise tax of 1 is imposed on good “2022”, the supply of good will decrease,
because it shift vertically up by 1 at each output.
C. Knowing that the ad valorem tax means that the new supply curve will not be parallel to
the original so if an ad valorem tax of 5 percent is imposed on good “2022” the supply of goods
will decrease because the supply curve will rotate counter clockwise.
D. If a technological change reduces the cost of producing additional units of good “2022”, the
supply of good 2022 will increase.
M2. T3.
A. s
Q x = - 50 + 0.5Px - 5Pz
Px = 500 and Pz = 30
=-50+ 0.5(500)-5(30)
= 50
B. s
Q x = - 50 + 0.5Px - 5Pz
Px = 50 and Pz=30
= - 50 + 0.5(50) - 5(30)
= 175
Suppose Pz = 30. Determine the supply function and inverse supply function for good
C. X. Graph the inverse supply function.
= 50 + 0.5 Px - 5 P2
= -50 + 0.5 Px - 5 (30)
Supply function= -200 + 0.5 px
Inverse function= 400+2qxs
Price
400
2 Quantity
200
M2. T4.
Good Y is a substitute for good X, while good Z is complement for X.
Good X is a normal good.
C. d 4,910 5,900 55,000
Q x =1,200 − + −8 (90)+ =5000
2 4 10
There are 5000 units of good X will be purchased when Px = 4,910.
D.
d 1 1 1
Q x =¿ 1,200 - PX + PY - 8 PZ + M
2 4 10
PY = 5, 900
PZ = 90
M = 55,000
1 1 1
Qdx = 1,200 - PX + (5,900) - 8 (90) + (55,000)
2 4 10
1
Qdx = 1,200 - PX + 1,475 - 720 + 55,000
2
Demand function
1
Qdx = 7, 455 - PX
2
Inverse function
PX = 14, 910 - 2Qdx
Price
14, 910
PX = 14, 910 - 2Qdx
Quantity
7, 455
M2. T5.
A.
1 1 1
7 − Px = Px −
2 4 2
Px = 10
Therefore the equilibrium price is 10.
1 1 1
7 − (10) = (10)−
2 4 2
Qc = 2
Therefore the equilibrium quantity is 2.
B. Quantity demand
1
Qd = 7 − (42)
2
Qd= 42
Quantity supply
1 1
Qs= (42)-
4 2
Qs= 10
Therefore there is a surplus since the price
floor is above the equilibrium price of 10.
C.
Quantity demand
1
Qd = 7 − (30)
2
Qd = -8
Quantity supply
1 1
Qs= (30)-
4 2
Qs=7
Full economic price 7
1
= 7−
2
M2. T6.
A. d s
1
Q x =Q x d
Px
Q x =¿ 7 -
2
1 1 1
7 − Px ¿ Px − 1
2 4 2 d
Qx ¿ 7 - (10)
2
3 1
Px ¿ 7 d
4 2 Qx ¿ 7 - 5
Equilibrium price = 10
Equilibrium quantity = 2 units
Excess surplus
Price
Equilibrium price
c
10
10
0 1 2 Quantity
Demand shortage
B.
Supply equation without tax : Px = 2 + 4QS
supply equation with tax : Px = 2 + 4QS + 6
Px = 8 + 4QS
1
So, QS = Px - 2
4
1
QDx = 7 - Px
2
1
QSX = Px - 2
4
1 1
7- Px = Px - 2
2 4
3
Px = 7 + 2
4
Px = 12
1
QDX = 7 - (12)
2
New equilibrium price and Quantity is: p=12 and q=1, when excise tax of 6 is imposed.
C. Tax rate x qty
=6 x -1
=6
Therefore the tax revenue if the government earn with Php6 tax is 6.
