Economics Essay Questions - Analysis & Recommendations

Question 1: Changes in non-price factors and their impact on market share

1. Provide an example where changes in one or more of the non-price factors that influence demand have either helped a company to expand their market share or caused the company to lose their market place. You will need to fully explain your answer and the non-price factor/s related it.”

2. Explain what will happen to the UK market priceand market quantity of tea if there is an increase in the price of coffee combined with an increase in transportation cost in the country.

3. Congratulations you are the CEO of company FANTASTIC plc. It has been estimated that a 4% increase in your customers’ income will result in an increase in sales of your main product, X by 5.5%. Using this information answer the following questions:”

a. First calculate the income elasticity of your main product?

b. What type of a product is X? Fully explain using an example.

c. What type of income elasticity in associated with product X, why and what does this mean?

d. What will you do IF the income of your customers drops by 2%?

4. At the beginning of the fiscal year the labour union was able to negotiate a 1% increase in wages. However, at the end of the year inflation was calculated to be actually 3%. Using this information answer the following questions:”

a. What does this imply?

b. Using a graph demonstrate what the aggravated supply will look like during the year and explain why this is the case?

1. You are a business consultant and Alex and two of his friends have come to you for advice on their business idea. After listening to their idea, you have made the following notes:

A burger and hotdog joint: They think it would be good as there are a lot of students in the town and they all like burgers and hotdogs. Although there are a lot of other restaurants around the town and nearby villages, Alex and his friends think that with a good business plan they can succeed. For instance, they could offer free delivery to students and half price lunches to locals once a week. Also, they don’t plan on hiring anyone at the beginning as they will not be able to cover the costs.

After doing some research of you own you have been able to find out that:

Starting the business venture is feasible.

Due to the university located in the centre of the town, there is a large and multinational student population living in the town during the term (when the university is open).

Now you must analyse their idea from an economical point of view and write a report to include the following answers. Provide examples to enhance your report where relevant.

What type of market will Alex and his friends be operating in and what are the characteristics of this market?

What type of economic profit would they expect to earn in the short and long run? Fully explain your answer

Provide suggestions to help develop and improve the current business plan”

2. You are the co-founder and CEO of Fantastic PLC. The below announcement regarding oneof the products (product X) your company produces has been brought to your attention by your partner asking you for advice on what the company should do in light of this event:

A documentary recently aired on the health channel followed a scientific research that confirmed products, like product X, contain carcinogenic chemicals in concentrations harmful to human health

Write a report to include the following answers:

Describe how the above event will affect the demand for product X that your company is producing.

In light of this change make proper business recommendations (e.g. maintain/increase revenues and/or to maintain/regain/increase customers/market share). Use examples to better explain your answer.

3. Fully explain the full circular flow of income model (5 sector model) and the relationship between all sectors involved. Provide relevant example for EACH component of the model. Use a diagram to illustrate your explanation and the relationship between the sectors.”

4. “You have been asked to step in for a colleague who had to unexpectedly take some time off. On your first day, your line manager presents you with the below graph and asks for your advice on how to proceed. Also, they provide you with the following notes made by the colleague you are filling in for:

The economy is currently in position (so from this point onwards the graph has been drawn using data and information provided by the bank of England)

The company made great investment at position A è BIG MISTAKE!! Not sure what points B and C are?!

You need to write a report to include the following answers. Provide examples to enhance your report where relevant.”

What is this graph demonstrating?

What are points A, B, and C demonstrating and why?

Why has your colleague indicated that the investment made by the company at point A was a big mistake?

Considering that you are currently at point D what would you advise your company to do and why?