GHANA COMMUNICATION TECHNOLOGY UNIVERSITY
MANAGERIAL ECONOMICS (BUEC 465)
FIRST SEMESTER 2020/2021 ACADEMIC YEAR
Assignment Two
THESE ARE QUESTIONS ON EFFECT OF DEMAND AND/SUPPLY CHANGE ON THE
EQUILIBRIUM PRICE AND QUEANTITY.
1. In the market for sugar, there has been a discovery of a new technology for more production
of the commodity. In that same market, consumers expect price of sugar to fall in the next
month. As a student of managerial economics, analyse (with the aid of a well labelled diagram)
the effect of these simultaneous occurrences on the equilibrium price and quantity of sugar
respectively.
Hint: Use the scenario where the magnitude of the supply change is greater than the demand
change
2. In the market for sugar, there has been a discovery of a new technology for more production
of the commodity. In that same market, consumers expect price of sugar to fall in the next
month. As a student of managerial economics, analyse (with the aid of a well labelled diagram)
the effect of these simultaneous occurrences on the equilibrium price and quantity of sugar
respectively.
Hint: Use the scenario where the magnitude of the demand change is greater than the supply
change
3. In the market for kenkey (INFERIOR GOOD), consumers’ income has decreased. In that same
market, the prices of raw materials used for producing kenkey has also decreased. Using your
knowledge in demand and supply, draw and analyse the effect of these simultaneous
occurrences on the equilibrium price and quantity respectively if the magnitude of income
decrease is smaller than the decrease in raw material prices.
4. In the market for kenkey (NORMAL GOOD), consumers’ income has decreased. In that same
market, the prices of raw materials used for producing kenkey has also decreased. Using your
knowledge in demand and supply, draw and analyse the effect of these simultaneous
occurrences on the equilibrium price and quantity respectively if the magnitude of income
decrease is smaller than the decrease in raw material prices.