MS-9 - Managerial Economics

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

help.mbaassignments@gmail.com

or

call us at : 08263069601

ASSIGNMENT

Course Code                                                      :                                               MS-9

Course Title                                                       :                                               Managerial Economics

Assignment Code                                            :                                               MS-9/TMA/SEM-II/2016

Coverage                                                             :                                               All Blocks

Note: Attempt all the questions and submit this assignment on or before 31st October, 2016 to the coordinator of your study centre.

Question.1. Describe Incremental Cost. Differentiate between Incremental Cost and Equi- Marginal Principle. Explain how does consumer maximize utility with the help of Equi-Marginal Principle?

Answer:An incremental cost is the increase in total costs resulting from an increase in production or other activity.

For instance, if a company's total costs increase from $320,000 to $360,000 as the result of increasing its machine hours from 8,000 to 10,000, the incremental cost of the 2,000 machine hours is $40,000.

Question.2. A firm’s demand function is given as P=32-6Q and the average cost function as AC=Q2 – 7.5Q+50+2/Q. Calculate the level of output Q which:-

a) maximizes total revenue

Answer:managerial economics - amber, Saturday, October 30, 2010 at 1:22am

A) Total revenue is the product of the quantity sold and the price at which they were sold.

(total revenue) = Q*P

= Q*(24 - .5Q)

b) maximizes profits

Answer:The profit on each unit is the difference between the selling price and the cost. The total profit will be the product of the unit profit and the number of units sold.

(total profit) = Q*(P - AC)

= Q*((24 - .5Q)

Here is a plot of profit versus quantity sold.

Question.3. Discuss Long- Run Cost Functions. Why long run cost curve is called a planning curve and explain how does it help in future decision making process?

Answer:In economics, "short run" and "long run" are not broadly defined as a rest of time. Rather, they are unique to each firm.

Long Run Costs: Long run costs are accumulated when firms change production levels over time in response to expected economic profits or losses. In the long run there are no fixed factors of production. The land, labor, capital goods, and entrepreneurship all vary to reach the the long run cost of producing a good or service. The long

Question.4. Why is there a kink in the market demand curve of oligopolists? Explain price rigidity of the Kinked Demand Curve.

Answer:Often prices appear to be relatively stable in oligopolistic markets. There are different models to explain periods of price stability. The most predominant one being the Kinked demand curve model, though this has received substantial criticism and economists have put forward other explanations.

Kinked Demand Curve

Question.5. Briefly describe the characteristics of perfect competition, monopoly, monopolistic competition, and oligopoly markets. Identify any four products one each from these markets.

Answer:Economists assume that there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market, which allows price to change in response to changes in supply and demand.

Question.6. Write short notes on the following:-

a) Direct and Indirect Costs

Answer:The essential difference between direct costs and indirect costs is that only direct costs can be traced to specific cost objects. A cost object is something for which a cost is compiled, such as a product, service, customer, project, or activity. These costs are usually only classified as direct or indirect costs if they are for production activities, not for administrative activities (which are considered period

b) Price Leadership

Answer:Price leadership is when a firm that is the leader in its sector determines the price of goods or services. This approach can leave the leader's rivals with little choice but to follow its lead and match these prices if they are to hold onto their market share. Alternatively, competitors may also choose to lower their prices in the hope of gaining market share as discounters.

The impacts of price

The dominant firm model occurs when one firm controls the vast majority of the market share within an industry. As the dominant firm adjust prices, any smaller firms within the segment must follow in order to maintain the small amount of market share they currently possess.

c) Peak Load Pricing

Answer:Peak-load pricing is a pricing technique applied to public goods which is a particular case of a Lindahl equilibrium. Instead of different demands for the same public good, we consider the demands for a public good in different periods of the day, month or year, then finding the optimal capacity (quantity supplied)

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

help.mbaassignments@gmail.com

or

call us at : 08263069601