Managerial Economics - Assignment Example

Managerial Economics Name: Tutor: Student ID: Course: Date: Managerial Economics: Assessment 1 1. In the past decade, advancement in information technology and computers has witnessed increased consumption of technology products such as laptops. Indeed, the ability and the willingness to purchase laptops have been overtaken by the rate of technological improvements in the sector. With increase in the levels of technology, the production costs of laptops reduce as demand for the items increase. This implies that manufacturers are producing more laptops at a cheaper cost. As a result, the demand for the laptops increases and the equilibrium price point on the demand curve shifts to the right and downwards. As shown in the figure above, technological improvement in computer technology leads to more quantities of laptops produced at a cheaper price. The price falls as the quantity of the laptops increases. The unit price falls from P1 to P2 as the quantity increases from Q1 to Q2. On the other hand, the equilibrium price point changes from point X to Y which is a shift outwards and downwards. 2. Changes in prices of similar goods triggers a certain responsiveness to demand governed by the price elasticity of demand. In periods of economic growth, consumer incomes generally increase leading to greater consumption of certain items or shift in consumption to superior goods. A good is income inelastic if its income elasticity of demand is between 0 and 1 (>0 good X Read More