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Published by: Sanjeev Kumar on Nov 24, 2010
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Managerial Economics - ADL-04-Ver2
Assignment - A
Question l. How does economic theory contribute to managerial decisions?Answer:
Managerial economics is the study of economy through the manager's point of view. It is the branch of economics concerned with the application of economic principlesand methodologies in the decision-making function of businesses and other managementunits. It bridges economic theory and economics in practice. Its basic concepts are derivedmainly from microeconomic theory, which studies the behavior of individual consumers,firms, and industries.
Note: Visit for complete and best solution:DistPub.comQuestion 2. Expain the law of demand. Briefly discuss the exception to the law of demand.Question 3. Expain the various components of demand function.Question 4. (i) Given the demand function Qd = 12 - p
a) Find the demand and revenue schedules.b) Find the MR when P - 10, 6 and 2.
Question 4. (ii) Distinguish between linear and non linear demands functions.Question 5. Expain the trend projection method of demand forecasting?
Assignment - B
Question 1. Expain the concepts of return to scale and returns to a factor.Question 2. Expain the following:-
Opportunity CostsFixed CostsSocial and Private CostsSunk Costs
Question 3. Expain the reationship among the average total cost marginal cost andaverage variable costs.
Case Study
The market research department of M/s. Bengal Cable Company, Cacutta was entrusted withforecasting the demand for cables of the company. It was felt that the demand for cables isconsiderably influenced by the pace of industrialization, power deveopment transmission andindustrial and house wiring. Bengal Cable Company is exclusively engaged in themanufacture of required by industry and housing.While many factors such as the rate of building activity purchasing power, etc. are importantin determining the demand for cables, it was felt that most of the demand for cables can beexpained in terms of the growth of power consumption in the country. Since for industry and buildings, cables are a must, the price factor was not considered as significant variable indetermining the demand for cables. After al this product has no substitute.The market research department of M/s Bengal Cable Company, Cacutta, deveoped a modelrelating al India cable sales (Industrial and housing cables) to the peak demand for power inthe country. The analysis based on time series data has shown a strong positive correlation between al India cable saes and the peak demand for the corresponding year. The estimatingequation is as follows:-Yt = 1173 + 28.5 XtWhere Yt = annual cable sales 9in thousand coils) for al India in year tXt = peak demand in milion K.W. in year tr2= 0.94 The Central Electricity Authority of the Government of India has estimated the peak demand for the year 2004 as 98.5 milion K.W., taking into account likely industrial and building growth and the avaiability of power on an al India basis. As there are no markedseasonal fluctuation, it is considered proper to assume uniform monthly cable saes throughoutthe year. It is estimated that Bengal Cables market share in 2004 will be about 20 percent.
Question 1. Find out the al India cable demand for the year 2004 and monthly estimatedsaes of Bengal cables Company.Question 2. The price factor was not considered important in forecasting al Indiademand for cables. Will the same be true in estimating demand for thecompany's cables?Question 3. Suppose the market share of the company during the previous two yearswas 10 and 15 percent respectively. Was, therefore the company justified inassuring the market share as 20 percent?
Assignment - C
1. In order to maximize profit, the firm follows:-a) Incremental conceptb) Equi-marginal principalc) Discounting principed) None of these
2. In choosing between beef 7 shirts, consumers increase their purchases of each untila) the marginal utility from the last rupee spent on one is the same as on the other b) the marginal utility from the last pound of beef is the same as from the last shirtc) the total utility from one is the same as from the other d) none of the above.3. Which of the following is a fixed cost?a) cost of machineryb) wagesc) cost of plantd) ‘a’ anc4. In the ong run there are noa) fixes costsb) variable costsc) normal profitsd) economies fiscale5. Marginal cost can be defined as thea) cost of the most efficiently produced itemb) change in fixed cost resulting from one more unit of productionc) difference between fixed and variable cost at any level of outputd) amount one more unit of output adds to total cost.6 Fixed costs are those costsa) that are subject to diminishing marginal productivityb) that are embodied in the caculation of marginal costc) that are independent of the rate or outputd) that are implicit to a competitive firm.7 A purely competitive firm is in short run equilibrium and its MC exceeds its A3. It can beincluded thata) firms will leave the industry in the ong runb) the firm is realizing an economic profitc) the firm is realizing a ossd) this is an increasing cost industry8. The competitive seers short-run supply curve isa) synonymous with its marginal cost curveb) its marginal revenue curvec) that part of its marginal cost curve lying above average variable costd) its average fixed cost curve.9 The monopolistic firms demand curvea) is always inelasticb) coincides with its marginal revenue curvec) is perfectly elasticd) is less eastic than a purely competitive firms demand curve.

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