Demand , Marginal cost , Price elasticity of demand



Course Code :MS- 09
Course Title : Managerial Economics
Assignment Code : 9/TMA/SEM-II/2010
Coverage :All Blocks

Attempt All the Questions.

“A close relationship between management and economics has led to the development of managerial economics.” Explain this statement. BOOK NO 1 PAGE NO. 7

Managerial Economics consists of the use of economic modes of thought to analyse business situation Spencer and Siegelman have defined Managerial Economics as “the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management”. We may, therefore define Managerial Economics as the discipline which deals with the application of economic theory to business management. Managerial Economics thus lies on the borderline between economics and business management and serves as abridge between economics and business management and serves as a bridge between the two disciplines.See Chart1

Chart 1 – Economics, Business Management and Managerial Economics.



2. Given a firm’s demand function, P = 24 - 0.5Q and the average cost function, AC = Q2 – 8Q + 36 + 3/Q, calculate the level of output Q which a) maximizes total revenue b) maximizes profits

Night Timers is a small company manufacturing glow-in-the-dark products. One of the hottest items the engineering department has developed is adhesive tape that can be applied to walls and floors. Night Timers' chief engineer anticipates that the product will be sold in ten-foot rolls. At present, the company's maximum production capacity is 140,000 rolls per year. The engineer believes the cost function to be described by: C = $50,000 +0.25 Q Night Timers' president seeks to establish a price that maximizes profit. She thinks that the firm should be able to sell at least 125,000 rolls of tape per year. The marketing manager forecasts demand for...
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