Students First Name: Godwin Musenya

Students Surname: WALI

School: HUMANITIES

Degree Program: PROJECT MANAGEMENT

Course Name and Code: INFORMATION MANAGEMENT SYSTEM I (ICE0025)

Assignment Number: ONE

Student Number: 1712246023

Mode of Study: DISTANCE LEARNING

Email Address: [email protected]

Phone Number: 0972836513

Lecturers Name: MR. H. SINKALA

Due Date: 15TH OCT 2022

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UNIT ONE: THE SUBJECT MATTER OF ECONOMICS

QUESTION ONE:

A). Martin (1984) claims that the word "economics" derives from a Greek term that means "One
who governs a Household." The etymology of the word "economics" suggests that managing a
home involves making a number of choices, such as who will prepare lunch, wash dishes, and
decide how much time should be spent watching TV, playing, and sleeping. Similar to this,
economics needs making judgments on how to manage and allocate the existing limited
resources in order to increase output of products and services. From this perspective, economics
becomes social because its primary area of study is how members of society interact with one
another in the marketplace. Additionally, economics is a social science since it employs
scientific methods to develop ideas that serve to explain how people behave in their daily lives,
including how they allocate scarce resources among individuals, groups, and organizations. The
distribution, consumption, and creation of goods, services, and commodities—all of which are
based on the actions and decisions of both groups and individuals—make economics a social
science.

B). Since society is constantly in need of resources to carry out the creation of goods and
services as a means of meeting its demands, the subject of economics is essentially the scarcity
of resources. The study of economics is important because it aids in strategically and
methodically planning the distribution or allocation of scarce resources to the most important
sectors of production of goods and services in order to optimize the outcome, maximize the
profits, and be able to meet market demand. As seen above, the resources needed for production
are insufficient to meet the demand.

c). Microeconomics and macroeconomics are "the two levels at which economics is studied,"
according to Banrjee (1991). While macroeconomics studies all facets of economic phenomena,
such as inflation, unemployment, economic growth, gross domestic product (GDP), and many
more, microeconomics focuses on how households and businesses interact and make decisions in
particular markets. To put it another way, macroeconomics studies the economy on a bigger
scale than microeconomics does.

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D). An economic model is a condensed explanation of reality that produces testable predictions
of how the economy will behave. Economic theory is a body of ideas and precepts that describe
how different types of economics operate. As a result, economic theories and models are created
to clarify and characterize the various types and applications of complicated economic reality.
While economic models are used to explain and analyze the prices and quantities that are traded
in a competitive market and to determine the level of supply and demand as a function of price
and other variables like income, economic theories serve the purpose of explaining why
economic events like inflation or supply and demand occur.

UNIT TWO: The Economic Problem

a). Economic resources are components that are employed in the creation of goods and the
delivery of services. Economic resources are "the raw materials or inputs utilized to make things
and provide services," according to Edward (1998).

b). LAND: According to Lewanika (1934), land is used "as a raw material in the production
process, similar to trees, oil, metals, and natural resources provided by nature at no cost." A
production factor, land is an essential component in the creation of commodities and services.

c). CAPITAL: This is money or other liquid assets that are being retained or acquired for use. It
is also described as assets with a monetary worth owned by a corporation, such as its inventory,
real estate, and equipment.

d). LABOUR: This represents the amount of work that people have done.

e). ENTREPRENEURSHIP: This is the process of coming up with novel resource combinations.
It may also be described as the process of starting a new business and taking on its risks in an
effort to turn a profit.

c) The law of diminishing returns is a concept in economics that says that as investment in a
certain area rises, the rate of profit from that investment can no longer increase if other factors
stay the same.

D). i. Automobile Production: If car production rises by 10% annually but demand only rises by
7% annually, car manufacturers' profits will decline unless other factors are taken into
consideration, such as improving car quality (lifespan, fuel efficiency, and road stability),

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making cars more affordable, and adding numerous other factors so that car production can keep
pace with market demand.

ii) Wheat Production: The amount invested in wheat production should always match the crop's
needs at every stage of growth, including the availability of water, labor, and farming supplies.
The farmer must always ensure that the crops he or she grows will produce high-quality wheat
products in order for profits to be realized. The amount of fertilizer, water, insecticides, and labor
that must be equal to the amount of wheat throughout the entire production cycle are some of the
variables that must match the yield of wheat in order for this to be possible.

iii) Attending Lectures: The purpose of education is to provide students with knowledge that they
can use as adults. Only two methods—studying or conducting research and attending lectures—
can accomplish this. In order to complete these tasks and reach the goal of education, time must
be made available. Everyday effort and dedication to the lectures should be increased. As a
result, the results produced will be significantly negatively impacted if one or more factors, such
as paying attention to lectures and studying, are ignored; thus, the concept of diminishing returns
is applied in this context.

e). The market system is described by Dwight (1991) as "the network of buyers, sellers, and
other actors that come together to trade a specific product or service." The market system
promotes the production of goods and services that have a higher value, which helps to address
important economic challenges related to the distribution of limited resources. Prices are used by
the markets as signals to direct resources toward the production of commodities that consumers
are ready to pay more for than other goods because they are in high demand. In other words,
businesses that manufacture goods and services will devote greater resources to those that
command higher prices.

UNIT THREE: SUPPLY and DEMAND

QUESTION THREE:

a) SIMILARITIES:
Both a change in quantity supplied and a change in supply involve movements along the
supply curve; as a result, both are movements along the supply curve. A shift along the
supply curve in reaction to a change in price results in a shift in supply, whereas a shift in

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quantity supplied results in a shift along the supply curve. A movement in the entire
supply curve in reaction to something other than pricing is referred to as a change in
supply. A change in supply refers to the total supply along the supply chain, whereas a
change in quantity supplied relates to particular commodities along the supply chain. As a
result, both terms deal with the specific changes in goods that are influenced by market
variables like demand and prices. Finally, the low cost of manufacturing encourages
production, which alters the quality of the output and the fluctuation in supply.
DIFFERENCES
The two differ in their movements along the supply curve because they are movements in
different directions, which is one of the contrasts between changes in supply and changes
in the quantity supplied. Second, a change in supply is a shift in the supply curve as
opposed to a change in quantity delivered, which is a movement along the supply curve.
Thirdly, shifts in the demand curve that cause changes in supply are tied to changes in
quantity delivered, whereas changes in supply are related to changes in the supply curve.
b. The results of this type of government interference with the price mechanism are that
the prices of products and services are solely determined by the government's direct
approval. This merely indicates that the government is the primary factor in determining
the market price of any good. This is primarily due to the fact that government
intervention in market price setting is a strategy used to try and protect consumers from
being taken advantage of by suppliers and to stop suppliers or producers from making
excessive profits at the expense of government subsidies used to reduce the cost of goods.
Furthermore, because investors dislike being overly restricted in their pursuit of financial
gain, this type of government interference does not draw investment into many sectors of
the economy.

Diagram
UNIT THREE: ELASTICITY OF DEMAND AND SUPPLY
QUESTION FOUR:
a) Bittlingmayer (1992) defines Price elasticity of demand as, “the ratio of the
percentage change in quantity demanded of a product to the percentage change in
price”. They are five various types of price elasticity of demand and these are,

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 i. Perfect Elasticity Demand: This occurs when there is a larger change in
demand in response to a smaller or percentage price adjustment. For instance,
a small change in price might cause the demand for a product to drop or halt
entirely.
ii. Perfect inelastic Demand: This occurs when customers don't adjust their
purchasing behavior to reflect an increase or drop in price. This suggests that
even when the price changes, demand doesn't change.
iii. Relatively Elastic Demand: This occurs when a product's demand changes
more dramatically by a bigger proportion than its price does. This suggests
that when a particular brand's price rises, people switch to new brands. But
some customers stick with the same brand.
iv. Relatively Inelastic demand: This is when the change in the demand of a
product is less than that of change in its price.
v. Unitary Elasticity Demand: This occurs when a product's price change and
change in demand are both the same.
The ratio of the percentage change in quantity demanded divided by the
percentage change in price is used to calculate price elasticity of demand. This
is made easier by the following formula;
PED=% change in quantity demanded
___________________________
% change in Price

B) Price is the sum of money that is anticipated, demanded, or provided as payment for
something, whereas cross elasticity of demand measures the relationship between two
commodities when the price of one of them varies. It is further described as the computations of
demand when the price of one product is impacted by another's price change. The cross elasticity
of demand in economics quantifies the relationship between the amount desired for one
commodity and the price of another good. The quantity of items that are actually demanded
depends on both the price of related products as well as the price of the commodity itself.

C). When a good's demand is elastic, the price elasticity of demand is greater than one; as a result, a rise
in price lowers overall revenue. The quantity effect in this situation outweighs the price effect. A higher
price increases overall revenues when demand is less than one.

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D) The inelastic position of the demand curve is where a firm confronting a negatively sloped curve
would produce because it should improve total revenue by raising pricing. The firm would confront
higher total revenues and lower production costs by raising prices until it operates in the elastic region of
the demand curve. With an increase in price, the firm would manufacture less of the commodity and save
on production costs.

E) Q=10-2p

i) Total scheduler

price Quantity
5 0
0 10

Demand Curve
6

0
0 2 4 6 8 10 12

ii)

Price Quantity Total Revenue Marginal Revenue

5 0 0 0
4 2 8 8/2=4
3 4 12 4/2=2
2 6 12 0/2=0
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 1 8 8 -4/2=-2
0 10 0 -8/2=-4
iii) The question is incomplete.

QUESTION FIVE:

a). The intensification of revenue for the company is referred to as profit maximization. In order
to achieve this goal, corporate organizations make an effort to embrace investment projects that
produce higher profits and tend to adopt any other unprofitable endeavors that demand inputs for
their production but result in losses. The earnings are restricted for the following primary six
reasons:

i) Discourage potential competition

ii) Develop public relations

iii) Restrain wage demands of organized labor.

iv) Maintain customer goodwill

v) Maintain control and

vi) Maintain pleasant working conditions.

b). The definition of business organization given by Charles (2001) is "how businesses are
structured and how these structures allow them to achieve their aims." In general, businesses are
set up to either generate money or better society through a variety of social endeavors. A
business is set up according to its goals and objectives in either scenario. There are four different
kinds of corporate entities.

i) Sole Proprietorship: An individual owns and manages this company for personal gain. The
owner's choice determines whether the firm will exist.

ii) Partnership: There are two variations of this: general and limited. In a general partnership,
both owners contribute resources including cash, assets, and labor. While limited partnerships
require a formal agreement and a certificate of partnership with the state, they are both subject to
departmental liability.

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iii) Corporation: This entity is regarded as a legal person for tax reasons. This means that
revenue provided to shareholders as dividends or profits is taxed first, then the profits earned are
taken as personal income.

iv) Limited liability company or LLC: This provides the owners with limited liability while
providing some of the income advantages of a partnership.

C) Private sector businesses are owned, controlled, and managed by people, groups, or
companies as opposed to public sector businesses, which are owned, controlled, and managed by
the government or other state-run organizations like parastatals.

D) i)

30

25
p

20
Equlibriam price

15

10

Q
0
0 2 4 6 8 10 12 14 16 18 20

From the supply curve above, the monopolist will produce 10 and charge 17.5 if he were to fix
one price for all consumers.

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 production posibility curve

35

30

25

20

15

10

0
1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5
ii)

If a producer produces 2 goods, he will charge 30, and if he produces 4 goods, he will charge
22.6 and if he produces 6 goods, he will charge 22.

This will lead into high social welfare. This is mainly caused because of the factors that have
caused the difference in the price such as the cost of production, the cost of supply of a particular
good to the consumers.

QUESTION SIX

A)

b) According to Chamberlin (1933), “Monopolistic competition exists when many companies

offer competing products or services that are similar, but not perfect and substitutes”. Some
examples of monopolistic competition are the fast food business, restaurant and hospitality, shoe
manufacturing, and juice manufacturing. The elements of monopolistic competition that are both
competitive and monopolistic are

i) Product Differentiation: Similar items from competing companies are differentiated by their
unique marketing approaches, brand names, and levels of quality.

ii) Pricing: In monopolistic competition, businesses set pricing for both goods and services.

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iii) Demand Elasticity: In monopolistic competition, demand is very elastic and responsive to
price fluctuations.

C) It is difficult to define the market demand curve in a monopolistic competition for the
following reasons.

a) It is challenging to pinpoint the specific market demand for the products in monopolistic
competition since the products are not uniform.

b) Because all the businesses are offering the same goods, defining an industry becomes too
difficult.

c) Since the product group under examination competes with other product groups, it can be
challenging to establish a group. On the other hand, defining the market supply curve is
challenging. This is due to the fact that under a monopolistic market system, quantity and price
do not always correlate. Because profits are maximized when marginal revenue equals marginal
cost, defining the equilibrium price under a monopolistic price is also challenging.

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REFERENCES

1. Chamberlin E. (1933), The Foundations Of Monopolistic Competition, Cambridge

Printing Press, UK.
2. Charles W. (2001), Business Encyclopidia Vol 4, 1st Ed, St. Johns Publishers, USA.
3. Bittlingmayer (1992), The Dynamics of Price Elasticity of Demand, Harvard University
Press, USA.
4. Dwight L. (1991), The Market Economy: A Reader, Mcgraw-Hill, USA.
5. Lewanika A. (1934), King Lewanika Of Barotseland, Government Printers, Zambia.
6. Edward B (1998), Pricing Nature: Cost-Benefit Analysis and Environmental Policy,
McGraw-Hill, USA.
7. Banrjee B. (1991), Advanced Macroeconomics, Marcelo Aarestrup Publihers Ltd,
Australia.
8. Martin W. (1984), Stagflation Savings, and the State: Perspectives on the Global
Economy, Deepak Printing Press, USA.

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