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Economics Assignment: Revenue & Demand Analysis

This document outlines an assignment for ECO 101, Principles of Economics I, at Nile University of Nigeria, due on November 20, 2023. It includes questions related to revenue optimization for a small-town movie theater, demand elasticity, and consumer behavior based on various economic factors. Additionally, it requires graphical illustrations of demand and supply changes, and explanations of price elasticities with real-life examples.

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Miracle Josiah
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32 views3 pages

Economics Assignment: Revenue & Demand Analysis

This document outlines an assignment for ECO 101, Principles of Economics I, at Nile University of Nigeria, due on November 20, 2023. It includes questions related to revenue optimization for a small-town movie theater, demand elasticity, and consumer behavior based on various economic factors. Additionally, it requires graphical illustrations of demand and supply changes, and explanations of price elasticities with real-life examples.

Uploaded by

Miracle Josiah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

DEPARTMENT OF ECONOMICS

NILE UNIVERSITY OF UNIVERSITY OF NIGERIA


ECO 101, PRINCIPLES OF ECONOMICS I, ASSIGNMENT 1

Instruction:

1. Assignment should be submitted on Monday, November 20, 2023.


2. Assignment should be clearly written on a neat A-4 Paper.

1. You own a small-town movie theatre. You currently charge ₦5 per ticket for everyone who comes to your
movies. Your friend who took an economics course in college tells you that there may be a way to increase
your total revenue. Given the demand curves shown, answer the following questions.
DEPARTMENT OF ECONOMICS
NILE UNIVERSITY OF UNIVERSITY OF NIGERIA
ECO 101, PRINCIPLES OF ECONOMICS I, ASSIGNMENT 1

Price
10

9
2.
8

2 Child Demand
1

5 10 15 20 25 30 35 40 45 50 55 60 65 70 Quantity

P r i ce
10

2 Adult Demand
1

10 20 30 40 50 60 70 80 90 100 Quantity

a.
What is your current total revenue for both groups considering that price is ₦5?
b.
The elasticity of demand is more elastic in which market?
c.
Which market has the more inelastic demand?
d.
What is the price elasticity of demand if there is a reduction in price from ₦5 to ₦2 in the children’s
market? Is this elastic or inelastic?
e. Given the graphs and what your friend knows about economics, he recommendss you increase the
price of adult tickets to ₦8 each and lower the price of a child's ticket to ₦3. How much could you
increase total revenue if you take his advice?
3. Given the demand function for the commodity X:
Qx= f(Px , Py , Pz , I , T , E , Po , A)
Where;
DEPARTMENT OF ECONOMICS
NILE UNIVERSITY OF UNIVERSITY OF NIGERIA
ECO 101, PRINCIPLES OF ECONOMICS I, ASSIGNMENT 1
Px= Price of the commodity X
Py= Price of a substitute commodity Y
Pz= Price of commodity Z which is complement of X
I = Income of consumers
T = Tastes and Preference
E = Expectation
Po = Population of consumers
A = Advertisement
How will the consumer demand for a commodity X change?
i. If price of the commodity X rises.
ii. If price of the substitute good Y rises.
iii. If price of complementary commodity Z falls.
1. If income of the consumer [Link] there is a favourable change in taste and preference for commodity X.
iv. If price of commodity X is expected to rise in the immediate future.
v. If number of consumers increases in the market.
vi. If the firm producing X increases its advertisement expenditure.
vii. If income of the consumer rises and commodity X is a necessity.
viii. If income of the consumer falls and commodity X is a luxury good.

4. With a graphical illustration show the effect of (i) increase in demand on price and quantity (ii) increase in
supply on price and quantity (iii) decrease in demand on price and quantity & (iv) decrease in supply on
price and quantity.
5. .
6. (i) What is the difference between change in demand and movement along the demand curve &
(ii) What is the difference between shift in supply and change in quantity supplied. Also, show
the above with graphical illustration.

Wit h clear real-life examples, briefly explain the types of price elasticities. Graph them.

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