ECM002 Business Economics Instructions: Please answer four out of the following six following questions: Question 1. Suppose Cola- Sol and Miniranda are the only two companies producing a particular type of cola drink in the soft drink industry. Both companies are considering launching a new drink with a light lemon twist. They can launch their products either at a low price or at a high price. The expected net payoffs are the following: If both companies choose a high price strategy‚ Cola-
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FINANCIAL SYSTEM A financial system plays a vital role in the economic growth of a country. It intermediates between the flow of funds belonging to those who save a part of their income and those who invest in productive assets. It mobilises and usefully allocates scarce resources of a country. Meaning A Financial system is a complex‚ well-integrated set of subsystems of financial institutions‚ markets‚ instruments and services which facilitates the transfer and allocation of
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enterprise economy" is an economic system based on the distribution of economic goods where private individuals own the factors of production (land‚ capital‚ labor and enterprise) and decide what to produce. Prices of goods and services are determined in a free price system guided by the function of demand and supply. For example‚ the price of thick jackets will drop in summer because there is more demand of it in the winter. A market economy often contrasts with another economic system called the "planned
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1. (a) Explain how a firm operating in an oligopolistic market might attempt to increase its market share. Oligopoly: A market or an industry dominated by a few firms The key point in Oligopoly is that whether the number of the firms in the industry is big or small‚ a large proportion of the market/industry’s output is shared by just a small number of firms. The number of ‘a few’ firms that dominate the market varies depending on the sections of industry. For example 90% of petrol sold in a
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MBA 515 Practice Multiple Choice Questions 1. If the price of automobiles were to increase substantially‚ the demand curve for gasoline would most likely A) shift leftward. B) shift rightward. C) remain unchanged. D) become steeper. 2. Recently‚ many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes‚ we would expect A) the supply curve for soda pop to shift to the right. B) the supply curve for soda pop to become more vertical
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Economics 101 Spring 2011 Answers to Homework #1 Due 2/2/11 Directions: The homework will be collected in a box before the lecture. Please place your name‚ TA name and section number on top of the homework (legibly). Make sure you write your name as it appears on your ID so that you can receive the correct grade. Please remember the section number for the section you are registered‚ because you will need that number when you submit exams and homework. Late homework will not be accepted so make
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The economic objectives of individuals‚ firms and government. Economic Objectives of Firms Profit maximization Profit maximization is the process of obtaining the highest possible level of profit through the production and sale of goods and services. Profit is the difference between the total revenue a firm receives from selling output and the total cost of producing that output. Profit-maximization means that a firm seeks the production level that generates the greatest difference between
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An economic system is an organized way in which a state or nation allocates its resources and apportions goods and services in the national community. There are three types of economic systems namely the mixed economic system‚ free market system and the planned/command system. This paper aims to explain what a planned economic system is‚ the characteristics of the system and how resources are allocated within the system. A planned economy is an economic system in which factors of production are
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Economic Systems Numerous and diverse economic systems have been established throughout the course of global history‚ impacting society in various ways. Many of these systems include manorialism‚ capitalism‚ communism‚ market economy‚ and many more. An economic system that has greatly influenced a specific region and its society is communism‚ established in Russia during the Russian Revolution. During and after World War I‚ Russia was in chaos due to the opposition of czarist rule‚ economic hardships
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The objective of efficient resource allocation refers to an economy ’s ability to meet its obligations in ensuring that all social and economic objectives are met without waste‚ for example to allocate resources so that they are distributed efficiently to improve the standard or living. This is the only way that we can ensure that we will be able to maximize the number of goods and services that we are able to provide. In addition‚ we will also be more likely to guarantee the long term availability
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