Attempt all the problems.
problem1) Over the past decade, the demand for CDs has dramatically increased. What are some of causes of this increase in demand? According to supply-and-demand theory, price should rise when demand increases. Though, in recent years the average price of a CD has actually fallen. Describe this apparent contradiction between theory and fact.
problem2) Describe the difference between short run and long run production function. Cite one ex of this difference in business situation.
problem3) Describe main difference between perfect competition and monopolistic competition.
problem4) “The best forecasting method is the one that give the highest proportion of correct predictions” Comment. Enumerate the methods of qualitative and quantitative forecasting. What are the main differences between the two?
According to a study, the price elasticity of shoes in the United States is 0.7, and the income elasticity is 0.9.
(a) Will you suggest that Brown Shoe Company cut its prices to increase its revenue?
(b) What will be expected to happen to total quantity of shoed sold in Unites States if income rises by 10 percent?