Honesty and money

Answer the 5th question plus 1 more from questions 1–4. Then reply to 1 classmate’s thread.

  1. The demand function for Good X is defined as Qx = 75 – 2Px – 1.5Py where Py is the price of Good Y. Calculate the price elasticity of demand using the point formula for Px = 20 and Py = 10. Determine whether demand is elastic, inelastic, or unit elastic with respect to its own price and whether Good Y is a substitute or a complement with respect to Good X.
  2. Discuss how e-commerce affects you and/or your company.
  3. What is the method used in your company in estimating demand for your products?
  4. What are advantages and disadvantages of estimating demand by virtual shopping?
  5. How important is saving for a household and the economy? How much should be saved?

Additional information:

  • “Dishonest money dwindles away, but whoever gathers money little by little makes it grow” (Proverbs 13:11, NIV).
  • “Ants are creatures of little strength, yet they store up their food in the summer” (Proverbs 30:25, NIV).
  • “When they had all had enough to eat, he [Jesus] said to his disciples, ‘Gather the pieces that are left over. Let nothing be wasted'” (John 6:12, NIV).
  • “… there is also a paradox of excessive consumption and deficient saving…You cannot have a strong, healthy economy if all or most households face financial troubles because they are spending just about everything they earn (or can borrow) on consumption. Even though the incomes of Americans are the highest in history, so too is their financial anxiety…U.S. household debt as a share of income has increased steadily during the past quarter of a century…this debt to income ratio has soared, reaching nearly 135 percent in 2007. Clearly, this heavy indebtedness meant the Americans were in a weak position to deal with financial setbacks accompanying the 2008–2009 great recession. The heavy debt load also suggests that consumption is unlikely to rebound sharply as the economy begins to recover from the downturn.” — Gwartney, Macroeconomics 13th edition (p. 265)

Course Textbooks:

Froeb, L. M., McCann, B. T., Ward, M. R., & Shor, M. (2016). Managerial economics: A problem solving approach (4th ed.). Boston, MA: Cengage Learning. ISBN: 9781305259331.

Salvatore, D. (2015). Managerial economics in a global economy (8th ed.). New York, NY: Oxford University Press. ISBN: 9780199397129.