FINC 304: Recognizing Time Value of Money and Demand-Supply Analysis

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Questions and Answers

What is the concept of marginal analysis based on?

Incremental changes in production (correct)

Total changes in supply

Significant changes in demand

Radical changes in consumption

What is the primary consideration for making economic decisions?

Comparing marginal benefits and marginal costs (correct)

Comparing average costs and average benefits

Comparing total costs and total benefits

Comparing fixed costs and variable costs

What is the focus of the 'Market Analysis' topic?

Demand and Supply (correct)

Market Equilibrium

Effects of Changes in Demand and Supply

All of the above

What is the title of the main textbook used in this course?

Managerial Economics and Business Strategy Signup and view all the answers

What is the purpose of using information from popular business press?

To provide real-world examples Signup and view all the answers

Where can students find course materials?

On sakai (sakai.ug.edu.gh) Signup and view all the answers

What is the main reason for Lakenham Creamery's plan to expand its Norfolk County ice cream selections?

Increased demand for organic dairy products Signup and view all the answers

What is the source of the milk and cream used in Lakenham Creamery's new organic ice cream?

Imported Guernsey milk and cream Signup and view all the answers

What is the reason for Lakenham Creamery's current inability to produce the new ice cream selections?

Inadequate workforce Signup and view all the answers

What was the impact of the weather conditions on Guernsey Diary?

Suspended production of organic milk Signup and view all the answers

Why did Mary Hatchins ask Nigel to postpone the company's plans to increase the workforce?

Because of the reduction in cattle feed Signup and view all the answers

What is the primary reason managers need to understand supply and demand?

To build their own strategies and respond to the actions of their competitors Signup and view all the answers

What is the law of demand?

The quantity of a good consumers are willing and able to purchase increases as the price falls Signup and view all the answers

What is the substitution effect in the law of demand?

When the price of a good falls, the good becomes cheaper relative to other goods Signup and view all the answers

What is individual demand?

A schedule that shows the quantities of a commodity the consumer is willing and able to buy at various prices Signup and view all the answers

Why do consumers buy less of a good at a higher price?

Due to the substitution effect Signup and view all the answers

Study Notes

Time Value of Money

Recognize the importance of time value of money in economic decisions.

Marginal Analysis

Marginal analysis involves making economic decisions based on small, incremental changes in production or consumption.
Compare marginal benefits and marginal costs to make decisions.

Demand and Supply

Demand and supply are essential components of market analysis.
Market equilibrium is the point where demand and supply intersect.
Changes in demand and supply can affect market equilibrium.

Course Materials

The main textbook for the course is "Baye & Prince Managerial Economics and Business Strategy", 8th edition.
Additional materials will include articles from popular business press sources such as BBC Business News, The Economist, Wall Street Journal, and Business and Financial Times Ghana.

Organization

All course information is available on the syllabus.
Course materials will be available on Sakai (sakai.ug.edu.gh).

Guernsey Organic Milk Production

Lakenham Creamery, a small company, plans to expand its ice cream selections by introducing organic ice cream made from Guernsey milk and cream.
The company needs to increase its workforce by 25% to meet the new production demands.
However, Guernsey Diary, the primary dairy producer, has suspended its production of organic milk due to weather conditions, prompting the company to reconsider its plans.

Importance of Supply and Demand

Managers need to understand supply and demand to build their own strategies and respond to competitors.
Managers must understand how government policy affects supply and demand.

Demand

Individual demand is a schedule that shows the quantities of a commodity a consumer is willing and able to buy at various prices.
The law of demand states that demand curves are downward-sloping, meaning that quantity demanded increases when the price falls and decreases when the price rises.

Law of Demand

The law of demand holds because of the substitution effect and income effect.
The substitution effect occurs when consumers switch to alternative goods or services when the price of a good increases.
The income effect occurs when a change in price affects the consumer's purchasing power.

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Description

This quiz covers the concepts of time value of money, marginal analysis, and demand and supply in economics. It involves comparing marginal benefits and costs to make economic decisions.