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Course Code :
MS-9
Course Title :
Managerial
Economics
Assignment Code : MS-9/TMA/SEM-II/2015
Coverage :
All Blocks
Note: Attempt all the questions and submit this
assignment on or before 31st October, 2015 to the coordinator of your study
centre.
Q. 1. “The traditional objective of the firm
has been profit maximization. It is still regarded as the most common and
theoretically the most plausible objective of business firms.” Discuss.
Answer:The firm is an organization that produces a
good or service for sale and it plays a central role in theory and practice of
Managerial Economics. In contrast to nonprofit institutions like the ‘Ford
Foundation’, most firms attempt to make a profit. There are thousands of firms
in India producing large amount of goods and services; the rest are produced by
the government and non-profit institutions. It is obvious that a lot of
activities of the Indian economy revolve around firms.One of the crucial
determinants of a firm’s behavior is
Q. 2. With reference to the marketing approach
of demand measurement explain any two important sources of data used in demand
forecasting.
Answer:The vast majority of business decisions involve
some degree of uncertainty and managers seldom know exactly what the outcomes
of their choices will be. One approach to reducing the uncertainty associated
with decision making is to devote resources to forecasting. Forecasting
involves predicting future economic conditions and assessing their effect on
the operations of the firm. Frequently, the objective of forecasting is to
predict demand. In some cases,managers are interested in the total demand for a
product. For
Q. 3. Given the total cost function: C=16q2 +
10q+36 (where q is the output)
Find: (i) values of q for which ATC is falling,
and
(ii) values of q for which ATC is rising.
Answer:In economics, a cost curve is a graph of the
costs of production as a function of total quantity produced. In a free market
economy, productively efficient firms use these curves to find the optimal
point of production (minimizing cost), and profit maximizing firms can use them
to decide output quantities to achieve
Q. 4.“A Tata Sky Direct - to - Home (DTH)
service provider charges a base fee for booking into its system and then
charges extra for base packs, add-on packs, active packs and special packs.”
Explain this statement in terms of the Two- Part Tariffs used as pricing
strategy by the company.
Answer:A two-part tariff is a price discrimination
technique in which the price of a product or service is composed of two parts -
a lump-sum fee as well as a per-unit charge. In general, price discrimination
techniques only occur in partially or fully monopolistic markets. It is
designed to enable the firm to capture more consumer surplus than it otherwise
would in a non-discriminating pricing environment. Two-part tariffs may also
exist in competitive markets when consumers are uncertain about their ultimate
demand. Health club consumers, for example, may be uncertain about their level
of future commitment to an exercise regimen.
Depending on the homogeneity of demand, the lum
Q. 5. Explain the profit maximizing output for
a perfectly competitive firm in the long run.
Answer:In economics, profit maximization is the short
run or long run process by which a firm determines the price and output level
that returns the greatest profit. There are several approaches to this problem.
The total revenue–total cost perspective relies on the fact that profit equals
revenue minus cost and focuses on maximizing this difference, and the marginal
revenue–marginal cost perspective is based on the fact that total profit reaches
its maximum point where marginal revenue equals marginal cost.
Q. 6. Write short notes on the following:
(a) Breakeven output level
Answer:Breakeven output is a production level that
achieves zero economic profit. In other words, a firm is just "breaking
even." The total revenue received by a firm at the breakeven output just
matches the total cost incurred. However, because total cost includes a normal
profit, only economic profit is zero. A firm generally reports a positive accounting
profit at the breakeven level of production.Breakeven output can be identified
in
(b) Marginal rate of technical substitution
Answer:In microeconomic
theory, the Marginal Rate of Technical Substitution (MRTS)—or Technical Rate of
Substitution (TRS)—is the amount by which the quantity of one input has to be
reduced (
) when one extra
unit of another input is used (
), so that
output remains constant (
).
) when one extra
unit of another input is used (), so that
output remains constant ().
(c) Average variable cost
Answer:In economics, average variable cost (AVC) is a
firm's variable costs (labor, electricity, etc.) divided by the quantity of
output produced. Variable costs are those costs which vary with output.
Dear students get fully solved
assignments
Send your semester &
Specialization name to our mail id :
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Call us at : 08263069601
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