BUECO5903 Business Economics  Goods and Services are Scarce - Management Assignment Help

Assignment Task:

Task:

BUECO5903 Business Economics 
Assignment Part A- Microeconomics 
Instructions: Submit answers to any four (4) questions. Be sure to explain your reasoning clearly and fully and use diagrams where appropriate. Students should note that this task Assignment Part A —Microeconomics most be an individual piece of work. That is it most be the creation of the person submitting it. 
Question 1 
The Stop Decay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the last year. Recently, its closest competitor Decay Fighter reduced the price of its electric toothbrush from $35 to $30. As a result, Stop Decays sales declined by 1,500 units per month. (i) What is the cross price elasticity of demand between Stop Decay's toothbrush and Decay Fighter's tooth brush? Use the averaging formula. What does this indicate about the relationship between the two products? (3 marks) (ii) If Stop Decay knows that the price elasticity of demand for its toothbrush is -1.5, what price would Stop Decay have to charge to sell the same number of units as it did before the Decay Fighter price cut? Assume that Decay Fighter holds its price of its toothbrush constant at $30 Use the averaging formula. (3 marks). (iii)What is Stop Decay's average monthly total revenue from the sale of its electric toothbrushes before and after the price change determined in part (ii)? (2 marks) (iv) Is the result in part (iii) necessarily desirable? What other factors would have to be taken into consideration? (2 marks) 
Question 2 
(a) Explain the differences between accounting profit, economic profit and normal profit (3 marks). (b) Suppose that due to changing tastes there is a sudden increase in demand for emu meat. 
(i)Assuming the costs of emu meat production remain unchanged, what would you expect to happen to profits in the emu meat industry? (2 marks) (ii) Assuming that there are low barriers to entry into the emu meat industry, explain why resources would move into this industry? (2 marks). 
(iii)In the long run, what would you expect to happen to profits in this industry? (1 mark). (iv) Will normal profits occur in this industry in the long run? If so, explain why? 
Question 3 
(a)Critically analyse and explain the following statement. "Goods and services are scarce because resources are scarce". ( 5 marks) (b) During a five year period, the ticket sales of a city's professional football team have increased by 30 percent at the same time that average ticket prices have risen by 50 percent. Do these changes imply an upward sloping demand curve? Explain. ( 
 

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