Managerial Economics 5th Edition Ivan Png - Solutions

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A consumer aims at minimizing his utility by reaching the highest indiff erence curve that he can achieve.
When goods x and y are perfect complements, the indiff erence curve is a downward sloping straight line and the MRSxy is constant.
An indiff erence curve is convex to the origin.
An indiff erence curve is positively sloped.
An indiff erence curve depicts the various combinations of two goods, which give the same level of satisfaction or utility to the consumer.
With the help of a numerical example, analyse the relationship between total utility and marginal utility.
Write a short note on the cardinal utility approach.
‘Th e law of equi-marginal utility analyses the equilibrium of the consumer when he consumes more than one good’. Comment.
‘By using the law of diminishing marginal utility, Marshall derived the law of demand, which shows that there exists an inverse relationship between price and the quantity demanded of a good’. Comment.
Illustrate the law of diminishing marginal utility with a numerical example.
What are limitations of the cardinal utility approach? Discuss.
What are the assumptions on which the law of diminishing marginal utility is based? Discuss.
What is marginal utility? Explain.
What is total utility? Explain.
Diff erentiate between ordinal utility and cardinal utility.
Th e law of equi-marginal utility analyses the equilibrium of the consumer when he consumes one good.
For any quantity of a good, the area under the total utility curve would be the marginal utility for that quantity of the good.
Th e marginal utility curve slopes downwards.
Cardinal numbers are those which can be ranked or ordered.
Th e utility of a good is the power of the good to satisfy a want.
In your opinion, which is the best method for forecasting demand?
Write a short note on the methods of forecasting demand.
Write short notes on the following methods of forecasting demand:(a) Market experiments method(b) Time series analysis
Discuss the consumer survey methods of forecasting demand.
Discuss the complete enumeration method.
What is the sample survey method? Discuss.
What is the econometric method of forecasting demand?
What is the expert opinion method of forecasting demand?
What do you mean by the following:(a) Short-term forecasts(b) Long-term forecasts
In the time series analysis in the forecasting of demand for a good, a pattern emerges over time.
In the expert opinion method, the opinion of experts is taken to forecast the demand for the product.
In complete enumeration method, a selected group of the users or the potential consumers are asked directly about their future plans for the good.
Forecasts of demand are required only by the established fi rms in the industry and not by the new entrants.
Demand forecasting involves predicting of the future demand for a good.
What is income elasticity of demand? What are the diff erent types of income elasticity?
What is elasticity of supply? Discuss.
What is advertising elasticity? Discuss.
What is price elasticity of demand? How can it be measured?
What is supply? What are the factors which infl uence the supply? Analyse the supply function and the supply curve.
Discuss the signifi cance of the price elasticity of demand.
‘As we move down a linear demand curve, the price elasticity goes on decreasing’. Comment.
Analyse the change in demand as compared with shift s in demand.
What is demand? What are its characteristics?
Advertisement elasticity is a measure of the responsiveness of the quantity demanded of a particular good to a change in advertising, ceteris paribus.
Cross price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good to a change in the income of the consumer, ceteris paribus.
As we move down a demand curve, the price elasticity goes on increasing.
A change in demand or a change in the quantity demanded of the good is a movement, which occurs along the demand curve.
Individual demand is the total quantity of a good that is demanded by all the individuals in the market at a certain price over a given time.
‘To achieve the various objectives that a fi rm aims at, a manager has to take decisions from time to time’. What are these decision rules?
Besides profi t maximization, what are the other economic objectives of a fi rm?
How does a fi rm maximize the profi ts? Give a graphical explanation.
Discuss the diff erent theories of profi t.
What are profi ts? How can they be measured?
What is the optimization process? Explain.
What are the non-economic objectives of a fi rm? Discuss.
How does a fi rm maximize the profi ts? Give an algebraic explanation.
Diff erentiate between accounting profi t and economic profi t.
What are the objectives of a business fi rm?
By keeping the employees and the consumers happy, the fi rm nowadays has to fulfi ll the social responsibility.
J. A. Schumpeter had presented a theory, where profi ts occur only in a dynamic economy.
Economic profi t is the diff erence between TR and TCs.
Opportunity cost is the price that a fi rm must pay to a factor to prevent it from moving to the next best alternative use of the factor.
Traditional economic theory believes that there are a variety of objectives before a fi rm.
To resolve the three basic economic problems of what, how and for whom to produce, what are the areas of micro- and macro-economics that a manager should be familiar with?
What are the crucial business decisions that a fi rm has to make? How can a fi rm apply the managerial economics in making these decisions? Discuss.
How are microeconomics and macroeconomics related to the managerial economics? Analyse.
‘Th e three economic problems, what to produce, how to produce and for whom to produce, have to be tackled by every economy.’ Comment.
What is the managerial economics? Discuss.
How does a fi rm make use of the managerial economics to(a) choose the technique of the production.(b) determine its advertising expenditures.
How does a fi rm make use of the managerial economics to(a) decide on the price of the product.(b) estimate the demand for the product.
What is the purpose of studying the managerial economics?
What are the diff erences between microeconomics and macroeconomics?
Defi ne the managerial economics.
Th e second basic economic problem of how to produce relates to the distribution of the national products between the members of the society.
Th e problem of what to produce involves the decision as to which goods are to be produced and as to what quantities of those goods should be produced.
Th e three economic problems, what to produce, how to produce and for whom to produce, have to be tackled by every individual.
Managerial economics requires the application of economics in making the complex business decisions.
In an economy, the unlimited resources have to be utilized to satisfy the limited wants of the human beings.
Why should the charge for using a bridge vary by the time of day?
Explain how to regulate automobile emissions by a standard.
Explain how to regulate construction site noise with a user fee.
Explain rate-of-return regulation.
Appreciate how governments should regulate externalities.
Appreciate how governments should regulate markets with asymmetric information.
Appreciate the conditions for a potentially competitive market and how governments should foster competition.
Appreciate the conditions for a natural monopoly and how governments should regulate a monopoly.
15. Explain the roles of economies of scope in decisions about horizontal integration.
14. How can outsourcing resolve the monopoly power of an internal supplier?
12. How does the potential for holdup reduce the value of transactions and relationships?
11. Give an example of a holdup. Explain how this will induce the affected parties to avoid specific investments.
10. In the context of an incorporated business, explain the meaning of: (a) residual control; (b) residual income.
9. Why do businesses enter into contracts that are deliberately incomplete?
8. Maria is a pilot. Which of the following investments by her is relatively more specific to the airline that she works for? (a) An executive MBA program. (b) Training on the airline's flight management system.
7. A secretary's job includes typing letters and other responsibilities. Comment on a proposal to pay a secretary according to the number of letters that he types.
6. Explain how a taxi company can structure incentives based on relative performance to motivate its drivers to maintain their taxis carefully and avoid breakdowns.
5. Your compensation package includes shares of the company, which vest after three years. Explain the risk that you bear.
4. Why is it better to pay a real estate broker by commission, whereby she receives a percentage of the selling price of the property, rather than an hourly rate?
3. By considering benefits and costs to the various parties, explain why resolving moral hazard can be profitable.
2. Explain the moral hazard in the following situation. Leah has just bought comprehensive insurance on her car that covers loss and damage for any reason, including theft. Her insurer is concerned that she may take fewer precautions against theft.
1. In the context of your business or organization, explain the meaning of organizational architecture.

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Managerial Economics 5th Edition Ivan Png - Solutions

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