Managerial Economics Economic Tools For Today's Decision Makers 7th Global Edition Paul G Keat, Philip K Y Young - Solutions

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The equilibrium condition is satisfied also on the point of intersection between the budget line and indifference curve. Why does a consumer not stay at this point of equilibrium?
What is meant by consumer’s equilibrium? Explain and illustrate consumer’s equilibrium under the condition of measurability of utility and immeasurability of utility.
What are the conditions for consumer’s equilibrium under ordinal utility approach to consumer analysis? Explain and illustrate graphically.
What is meant the budget line? How is the budget line derived? Derive budget assuming a budget equation. How is the budget line affected by change in price of one good, all other factors remaining the same?
Define budget line. How is basis of deriving the budget line? What purpose does budget line serve in consumer analysis?
What is meant by marginal rate of substitution? Why does marginal rate of substitution decrease along the indifference curve?
Why is an indifference curve for two normal goods convex to origin?Why it cannot be concave to origin or a straight line?
What is indifference curve? What are the properties of indifference curve? What is the difference between linear and curvy-linear indifference curves?
Distinguish between cardinal and utility concepts of utility? What is the difference between cardinal and ordinal utility approaches to the analysis of consumer behaviour?
What is meant by shift in demand curve? What are the factors that cause upward or downward shift in the demand curve?
Why does demand curve slope down to the right? Under what conditions can a demand curve slope upward to right? Explain with examples?
What is the law of demand? What is the basis of law of demand? Prove your point of view by applying cardinal utility approach to consumer analysis.
What is the law of equi-marginal utility? What is the condition for equimarginal utility?
Prove that a consumer consuming two goods X and Y given their prices as P and P , respectively,x y is in equilibrium where MUx x P = MU y y P
Suppose marginal utility schedule of consumption of a commodity is given as follows.Units consumes 12 34 56 MU 100 80 60 40 20 0 (a) Find the find Consumer’s equilibrium if price of commodity is `60.(b) Derive the demand curve for the commodity.ANALYSIS OF CONSUMER DEMAND 147
What is meant by consumer equilibrium? What are the conditions of consumer’s equilibrium under cardinal utility approach? Illustrate consumer’s equilibrium diagrammatically.
What is meant by consumer equilibrium? Suppose total utility schedule of a consumer from his consumption of X is given as follows.Units of X consumed 12 34 56 78 Total utility 20 35 45 52 57 60 60 50 Suppose also that price commodity X is `5 per unit. Find consumer’s equilibrium.
What is law of diminishing marginal utility? What are the conditions for the application of the law of diminishing utility? Explain the law with the help of MU schedule and MU curve.
What is meant by utility? Distinguish between cardinal and ordinal concepts of utility. How is utility measured under cardinal utility approach?
What is the relevance of consumer demand to business decision making?How does analysis of demand contribute to business decision-making?
A sociologist conducts a survey of rural families to find out whether there is any relationship between the level of education (given in years of education) and monthly income. His survey produces the following data.
What is meant by the coefficient of determination? What is the test of explanatory power of an estimated regression equation?
What is meant by test of significance? Why is it necessary to perform the test of significance before accepting the regression coefficients?
What is meant by Ordinary Least Square? How is it used in estimating a regression equation?
What is meant by an error term? How are the error terms estimated?
What is meant by a bivariate linear function? What is the process of formulating an estimable bivariate function?
What is meant by cause-and-effect relationship between any two variables? Can the regression technique be used to measure the relationship between the level of education and crime rate? Give reasons for your answer.
What is regression analysis? Describe the nature of business problems which can be solved by using the regression technique?
What is meant by hypothesis? How is a hypothesis formulated?
The Jaico Jeans Co. has been manufacturing and selling a branded jeans“TOUGH” over the past several years. The company has always faced tough competition from the rival firms in the business. Jaico Jeans has, however, faced the competition successfully. The secret of its success has been its
By using the Lagrangian multiplier method, find the quantity of X and quantity of Y, subject to X + Y = 1000, that minimize the cost of meeting the order.
Suppose that the manager of a firm is planning to meet an order of 1000 units of two products, X and Y. The manager’s problem is to find the combination of two goods that minimizes its cost. He has the firm’s cost function of two goods estimated as C = 5 X 2 +20 Y
A company produces two goods, X and Y. The profit function (Π) of the company is given as follows:Π = 100 X – 2 X 2 – XY + 180 Y – 4 Y 2 The company is under obligation to produce a minimum combined output of X and Y equal to 30 units. Find the output of X and Y subject to a total of 30
Suppose a firm has its TR and TC functions estimated as follows:TR = 300 Q – 3 Q 2 and TC = 500 + 50 Q + 2 Q 2 Find (a) profit function of the firm, (b) the quantity of output ( Q) that maximizes the firm’s profit.
Suppose profit function of a multi-product firm producing two goods, X and Y is given as follows.X = 50 X – X 2 – XY + 60 Y – 2 Y 2 Find the profit maximizing combination of X and Y subject to X + Y = 30 by using Lagrangian multiplier method.
Suppose TR and TC functions are given as follows.(a) TR = 500 Q – 2 Q 2(b) TC = 750 + 50 Q + 2 Q 2 Find ( i) the profit function, and( ii) value of Q that maximizes profit.
Find the second derivative of the following functions.(a) Y = 5 + 10 X + 5 X 2 (b) Y = 5 X (2 + X 2)(c) Y = aXb + X
Find the derivative of the following functions.( i) Y = f ( X) = 100( ii) Y = f( X) = aXb( iii) Y = f( X)/ g( X)
A transport company plans to ferry tourists between Delhi and Simla. It has its cost function estimated as given below:TC = 100 + 50 N + 4 N 2 where N denotes number of passengers per day.Find (a) the average cost function; (b) number of passengers per day that minimizes the average cost.
The total cost ( TC) function of a company has been estimated as TC =100 + 5 Q + 10 Q 2 where Q = quantity produced. Find (a) marginal cost when Q = 10; (b) quantity (Q) at which average cost is minimum; and (c) Q at which average cost ( AC) equals marginal cost ( MC).
Suppose the demand function for commodity X is given as Qx = 100 – 5 Px. Find the total sale that maximizes total revenue ( TR).(Hint: Find first the price function from the demand function; TR = Q × P)
Suppose the price function for commodity X is given as Px = 100 – 0.2 Qx. Find the quantity sold that maximizes total revenue ( TR).(Hint: TR = Q × P)
What is meant by a ‘function’? How is an economic function formulated?
What are the methods of showing relationship between a dependent and an independent variable.Illustrate by tabular and graphical methods.
What is meant by ‘variables’? What are economic variables? Distinguish between (a) dependent and independent variables, and (b) endogenous and exogenous variables.
What is meant by time perspective in business decision? Under what kind of business decisions time perspective become an important consideration?
What is the equi-marginal principle? Under what conditions is the application of this law relevant?Illustrate how this law helps in optimizing the allocation of resources between the competing ends.
Define the concept of ‘incremental’ with reference to incremental revenue and incremental cost.How are incremental revenue and incremental cost different from the concept of marginal revenue and marginal cost?
How are marginal cost and marginal revenue estimated. What is the marginal condition for profit maximization?
What is marginal principle? What is the application of this principle in business decision-making?Illustrate the application of marginal principle in case of a firm maximizing its profit.
What is the basis of opportunity cost? Under what conditions is the opportunity cost equal to zero?
Define the concept of opportunity cost. What are its implications in business decisions?
What are the considerations in aiming at a reasonable profit target? What standards are used in determining a reasonable profit?
Explain how profit is used as a control measure. What problems are associated with the use of profit figure as a control measure?
State precisely the major propositions of the Williamson’s model of managerial discretion in determining the firm’s goal. How are his propositions different from profit maximization assumption?
Maruti Udyog Ltd. (MUL) is losing its market to other car manufacturing companies. Suppose MUL management is faced with a dilemma. If it retains its present level of profit margin, it will continue to lose its market share. And, if cuts down the price to retain the demand for its car and, thereby,
Profit maximization is theoretically the most sound but practically unattainable objective of business firms. Do you agree with this statement? Give reasons for your answer.
Profit maximization remains the most important objective of business firms in spite of multiplicity of alternative business objectives suggested by the modern economists.Comment.
State whether the following statements are true or false:(a) Pure profit is the return in excess of the opportunity cost.(b) Profit maximization is the sole objective of all the firms.(c) Profit is maximum when MR – MC is maximum.(d) Pure profit is nil when opportunity cost equals actual earning.
Why do firms in general aim at a reasonable profit rather than pursuing other goals? What are the standards of reasonable profits?
What are the objectives of business firms other than profit maximization?Are these alternative objectives of business firms theoretically sustainable?
Examine critically profit maximization as the objective of business firms.What are the alternative objectives of business firms?
What problems do the depreciation and capital gains cause in measuring profit? What are the methods of resolving the problems?
What is the most plausible objective of business firms? Why is there the controversy on profit maximization hypothesis? How will you react to the controversy?
Explain the following statements:( i) Profit is the rent for exceptional ability of an entrepreneur (Walker).( ii) Profits arise only in a dynamic world (J.B. Clark).( iii) Profit is a reward for risk bearing (F.B. Hawley).( iv) Profit is a return to uncertainty bearing (F.H. Knight).v) Profit is
Distinguish between the following concepts of profit:(a) Accounting profit and economic profit;(b) Normal profit and monopoly profit;(c) Pure profit and opportunity cost.
What are the major macroeconomic issues related directly to business decision-making? What is their significance in business decisions?
What are the basic functions of business managers? How does economics help business managers in performing their functions?
What is meant by business environment? What branch of economics is related to the environmental issues of private business?
What macroeconomic issues figure in business decision-making? How does macro-economics help in understanding the implications of macroeconomic issues?
What is macroeconomics? In what way is macroeconomics applicable to business decision-making.
What are the operational issues in business management? How does microeconomics contribute to decision-making in the operational issues?
How does the study of managerial economics help a business manager in decision-making?Illustrate your answer with examples from production and pricing issues.
“Managerial economics is the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by the management.”Explain.
What are the basic functions of a manager? How does managerial economics contribute to business decision-making?
“Managerial economics is applied microeconomics”. Elucidate.
What are the related topics other than microeconomic theories in managerial economics? How do they contribute to managerial economics?
Managerial economics is essentially the application of microeconomic theory of business decisionmaking.Discuss the statement.
“Managerial economics bridges the gap between economic theory and business practice”. Explain with examples.
Discuss the nature and scope of managerial economics. What are the other related disciplines?
What are the major areas of business decision-making? How does economic theory contribute to managerial decisions?NATURE AND SCOPE OF MANAGERIAL ECONOMICS 19
Managerial economics is the discipline which analyses the application of‘economic theory to business management’. Comment.
What is the nature and scope of managerial economics? How does managerial economics contribute to business decision making?
Define managerial economics and disucss its scope. What is importance of managerial economics.
Define benefit and cost externalities. Explain why situations involving benefit externalities tend to result in an underallocation of society’s scarce resources, and why situations involving cost externalities tend to result in an overallocation of society’s scarce resources.
“The reason the government has to step in and ‘internalize’ benefit and cost externalities is because people are basically selfish.” Do you agree with this statement? Explain.
Suppose a chemical company was fined for violating certain antipollution laws. As the spokesperson for the Environmental Protection Agency, how would you explain the economic reasons for these actions to angry customers of this company who were forced to pay more for the chemicals as a result of
Based on the competitive challenges that Microsoft faces from Google, do you think it still has “monopoly powers”? Explain.
A U.S. importer purchases a currency option. If the foreign currency does not rise to the strike price, what should the importer do?
You are analyzing a potential capital investment project involving a new product. As you are compiling the relevant data for your analysis, you are informed of an expenditure that occurred during the prior year. The marketing research department of your company conducted an assessment of the demand
Define the terms time value of money and timeline. Develop all possible time-value relationships among PV, FV, and annuities, and show opportunity cost on a timeline
What is capital budgeting? Compare and contrast the following capital budgeting terms:(i) Independent and mutually exclusive projects.(ii) Capital rationing and unlimited funds.(iii) IRR and cross-over points.(iv) Accept-reject and ranking methods.(v) Payback method and discounted payback method.
Elaborate on the basic ingredients of a probability distribution. What shape will the probability distribution curve take for perfectly deterministic returns? For perfectly uncertain returns?
Define beta. How is it used to compute the required rate of return on a company’s stock(the equity cost of capital)? If a company’s beta doubles, required return also doubles.True or false? Discuss.
What attribute about a war makes it a limited war? How does the concept of limited war relate to oligopolistic rivalry?
Why must much of the bargaining in economic situations be done on a tacit basis?
Is a prisoners’ dilemma game more of a problem for cooperative or noncooperative games?
Why is it particularly important to be the party who sets the agenda in situations involving tacit negotiation?
If there is asymmetric information, do sellers always have better information than buyers do?
Which effect dominates, the price effect or the quality effect of a price change if demand is upward sloping?

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Managerial Economics Economic Tools For Today's Decision Makers 7th Global Edition Paul G Keat, Philip K Y Young - Solutions

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