MGMT 5143 Executive Economics Final Paper

  1. Suppose the supply and demand curves are given by:

    QD = 200 – 2P
    Qs = 100 + 3P

    a. Find the equilibrium price and quantity.
    b. If the current price is $ 10, what is the quantity demanded and quantity supplied and what happens in the market for this product?

  2. Assume that the income elasticity of demand for off-Broadway theatre performances (such as those at the North Carolina Theatre at Flat Rock) is estimated as 3.0. Most of the patrons of these theatres are retirees. Over the last four years, interest rates have been very low so bond coupon returns and CD returns have been low affecting the income of many retirees. Given this information, how do you think the following have been affected at these type performances? Explain each answer.a. Number of tickets sold –
    b. Revenues –
    c. Number of “support gifts” (contributions in excess of ticket sales).
  3. For many years, the Flat Rock Playhouse near Hendersonville, NC has been very popular often drawing sell-out crowds to popular off-Broadway type productions. As a result, the company decided to expand and open an additional venue in downtown Hendersonville to offer additional entertainment to include both theatre and musical events. Now the company is mailing special discount offers and using other special promotions to try to attract audiences while that was a rare if not unheard of occurrence prior to this time.a. Are these type promotions likely to be successful? What information do you need to determine the likely success or failure?
    b. How does marginal cost, fixed cost, and variable cost affect pricing decisions for these type events?
  4. In Greenville, SC, a large arena previously known as the Bi-Lo Center was constructed several years ago to host differnt type events such as sports (minor league ice hockey), professional wrestling, concerts, etc. Assume that you are the promoter of events at the arena. How would you expect the following to affect demand for events at the arena. Be sure to explain each answer.a. A major event at the Peace Center in downtown Greenville
    b. A major football game at Clemson about 30 miles away
    c. the closing of BMW, a major employer in the area
  5. When the price of gasoline increases, customers still buy about the same amount of gasoline for a few weeks. If the price stays elevated, the quantity purchased begins to decrease. Using concepts of price elasticity of demand, explain this observation.
  6. Explain using cost concepts why airline manufacturers tend to be much larger than shirt manufacturers.
  7. The concept of “price gouging” has long been a favorite complaint of people who do not understand market forces and would like lower prices for some products (wouldn’t we all agree?). In fact, South Carolina has a law that prohibits “price gouging” during times of public emergencies such as the aftermath of a hurricane. Are these laws effective in getting more products to consumers in times of high demand as they make it illegal for a seller to increase prices above what they had been previous to the event that resulted in increase demand? Evaluate the impact of such laws.
  8. Many people have argued about the wisdom of the “TARP” program that was implemented late in the Presidential term of President George W. Bush with the full approval of the Congress. One of the main features of the program resulted in the Treasury department purchasing hundreds of billions of dollars of assets of companies like AIG to prevent a financial meltdown of many large financial companies. Briefly comment on the impact on the economy of this effort and explain what could have happened had this program (or something similar) not been implemented.
  9. Using the Expenditure approach, GDP can be divided into 4 categories, Consumption, Investment, Government, and Net Exports. In the United States, Consumption makes up about 70% of the total. When the economy of the country goes into recession, the Consumption category decreases and the Investment category typically also decreases and exports may also be affected. Given those issues, what category can increase to try to stabilize the economy? Explain!
  10. Much attention is given to the unemployment rate in the United States. The rate that is usually cited as the official rate is known as U3 from the Bureau of Labor Statistics. However, this rate does not include discouraged or underemployed workers. The Bureau of Labor Statistics does publish what is known as U6 which includes those categories and is much higher. The U3 rate was 5.5% in March 2015 while the U6 rate was 10.8% for the same time period. Which category best explains the labor market in the United States? Explain!
  11. Explain the difference between fiscal policy and monetary policy and indicate who is in charge of each.
  12. One of the important macroeconomic issues relates to the economic multiplier. Explain what the multiplier is in economic terms and explain why it is important.

Course: MGMT 5143 Executive Economics
School: Southern Wesleyan University

  • 24/06/2017
  • 2
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