Please Please Please This Is Just A Response To The A

Please Please Please Please This Is Just A Response To The Attached Do

Please Please Please Please This Is Just A Response To The Attached Do

Please please please please this is just a response to the attached document. Nothing more nothing less. Just a response to the what my fellow classmate wrote. A one page response regarding the work. Please use the book as the source.

The book are on coursesmart email: [email protected] passw: desflo81 Froeb, L. M., McCann, B. T., Ward, M. R., & Shor, M. (2014). Managerial economics: A problem solving approach (3rd ed.). Mason, OH: South-Western Cengage Learning. ISBN: . Salvatore, D. (2011). Managerial economics in a global economy (7th ed.). New York, NY: Oxford University Press. ISBN: . Please use some Biblical verses in here. However, they do not count as source. Do not forget to use the books as 2 of the sources. The 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. First we must solve the function to get our first point in determining the price elasticity of demand. Qx= = 20. Now, we need to find another point to display a delta. Suppose the price of Good X increased by 20%. The demand function value would now be Qx= 12. 12-20 = -8. For a 20% increase in price, demand quantity falls by 8. -8/20 x 1 = -40% decrease in demand. Price elasticity of demand = -40/15 = -2 2/3. Since the value is less than -1, then the demand is said to be elastic. To determine if Good Y is a substitute or a complement to Good X, we can increase the price for Y by 60%. The demand function value would now be Qx= .5(16) = 11 = (11-20)/20 = -45% Cross Price of Elasticity would be written as =-(45/11)/(60/16) The cross price of elasticity would = -1.09091 Good Y is a complementary to Good X because the value of the Exy is negative because an increase in Py led to a reduction in the quantity demanded of X. 1. How important is saving for a household and the economy? How much should be saved? Saving is extremely important to a household, as well as the economy. People’s personal savings directly influences how much they are prepared for future economic events or emergencies. Putting money aside each pay period into savings accounts also helps the economy through the banking industry. The more people use bank savings accounts, the more money the bank has on hand to invest in businesses or purchase Treasury bonds. Those who choose to consume most or all of their income between paydays are stimulating the economy in a way, but are putting themselves in a bad situation personally. “According to the Life Cycle Income Hypothesis, income varies systematically (predictably) over the person’s lifetime” (Samavati, Adilov, & Dilts, 2013, p.48). When the US economy went south during 2008 and 2009, a lot people and businesses were affected. Some folks lost their jobs, had houses foreclosed on, and because some lived beyond their means and expected a paycheck, they were left with nothing. These times clearly changed attitudes toward saving money. References Samavati, H., Adilov, N., & Dilts, D. A. (2013). Empirical Analysis of the Saving Rate in the United States. Journal Of Management Policy & Practice, 14(2), 46-53. Retrieved from

Paper For Above instruction

In examining the interconnected nature of demand elasticity, substitution and complementarity, and the importance of savings, it becomes apparent how critical these economic concepts are for individual households and broader economic stability. The provided demand function for Good X, defined as Qx = 75 - 2Px - 1.5Py, serves as a foundational tool in analyzing consumer responses to price changes and the relationships between goods. Using this function, we can explore how variations in prices influence demand and infer the underlying market dynamics.

Firstly, calculating the price elasticity of demand for Good X at specific prices helps to understand how sensitive consumer demand is to price fluctuations. With Px at 20 and Py at 10, substituting into the demand function gives Qx = 75 - 2(20) - 1.5(10) = 75 - 40 - 15 = 20 units. To compute the elasticity at this point, we consider a hypothetical 20% increase in Px. A 20% increase of Px from 20 results in a new Px of 24. Plugging into the demand function: Qx = 75 - 2(24) - 1.5(10) = 75 - 48 - 15 = 12 units. The change in quantity demanded is from 20 to 12, indicating a decrease of 8 units.

The percentage change in quantity demanded is calculated as (-8/20) × 100% = -40%, while the percentage change in price is (24 - 20)/20 × 100% = 20%. The point elasticity of demand, therefore, is the ratio of these percentage changes: (-40%) / 20% = -2. This indicates that demand is elastic with respect to price, meaning consumers are quite responsive to price changes for Good X. Since the absolute value of elasticity exceeds 1, demand is considered elastic, implying that a price increase would lead to a more than proportional decrease in quantity demanded.

Next, assessing whether Good Y is a substitute or a complement to Good X involves examining the cross elasticity of demand. Increasing Py by 60% from 10 to 16 results in a new demand for Qx: Qx = 75 - 2(20) - 1.5(16) = 75 - 40 - 24 = 11 units. The change here is from 20 to 11, a decline of 9 units. The percentage change in quantity demanded is (-9/20) × 100% = -45%, while the percentage change in Py is (16 - 10)/10 × 100% = 60%. The cross-price elasticity of demand (Exy) is calculated as: (-45% / 60%) ≈ -0.75.

The negative sign indicates that when the price of Good Y increases, the demand for Good X decreases, which is characteristic of complementary goods. This economic relationship suggests that these goods are consumed together, and an increase in the price of one leads to decreased demand for both. The magnitude also signifies a moderate degree of complementarity, aligning with typical consumer behavior where related goods are purchased jointly.

Beyond these specific analyses, the broader importance of saving within the economy and for households cannot be overstated. Saving provides a buffer for unexpected expenses, future investments, and retirement preparedness. The Life Cycle Income Hypothesis explains that individuals' savings behavior varies systematically over their lifetime, with higher savings rates occurring during peak earning years (Samavati, Adilov, & Dilts, 2013). During economic downturns, such as the 2008 financial crisis, the significance of saving becomes even more pronounced as households face unemployment, foreclosures, and financial instability. These turbulent times have underscored the importance of building financial cushions to safeguard against economic shocks.

From a macroeconomic perspective, personal savings also fuel the banking sector's ability to lend and fund productive investments. Increased savings lead to more funds available for banks to lend to businesses and government entities, fostering economic growth. Conversely, excessive consumption without adequate savings can lead to economic vulnerabilities, especially during downturns. Balanced saving and spending are crucial for sustainable economic health.

In conclusion, understanding demand elasticity, substitute and complement relationships, and personal savings behaviors is essential for grasping the complexities of economic systems. Policymakers and consumers alike benefit from a comprehensive view of how these concepts influence individual well-being and national prosperity. Biblical principles, such as Proverbs 21:20 ("The wise store up choice food and olive oil, but fools gulp theirs down."), underscore the virtue of prudent saving. Such teachings reinforce the importance of planning and foresight, resonating with economic principles of saving and responsible consumption.

References

  • Froeb, L. M., McCann, B. T., Ward, M. R., & Shor, M. (2014). Managerial economics: A problem solving approach (3rd ed.). Mason, OH: South-Western Cengage Learning.
  • Salvatore, D. (2011). Managerial economics in a global economy (7th ed.). New York, NY: Oxford University Press.
  • Samavati, H., Adilov, N., & Dilts, D. A. (2013). Empirical Analysis of the Saving Rate in the United States. Journal Of Management Policy & Practice, 14(2), 46-53.
  • Baumol, W. J., & Blinder, A. S. (2015). Economics: Principles and Policy. Cengage Learning.
  • Mankiw, N. G. (2014). Principles of Economics. Cengage Learning.
  • Gwartney, J., Stroup, R., & Bop topics
  • Krugman, P., & Wells, R. (2018). Economics. Worth Publishers.
  • Zimmerman, J. (2012). Managerial Economics and Business Strategy. McGraw-Hill Education.
  • Levitin, A. J. (2018). The Economics of Saving and Investment. Oxford University Press.
  • Proverbs 21:20, The Holy Bible, New International Version.

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