Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd
Upload
17 views2 pages

Individual Assignment (Managerial Economics)

Uploaded by

msesret

Copyright:

© All Rights Reserved
Download as DOC, PDF, TXT or read online from Scribd
Download as doc, pdf, or txt

Individual Assignment (Managerial Economics)

Uploaded by

msesret
17 views2 pages

Original Title

Individual Assignment (Managerial Economics) - Copy

Copyright

© © All Rights Reserved

Available Formats

DOC, PDF, TXT or read online from Scribd

Did you find this document useful?

Is this content inappropriate?

Copyright:

© All Rights Reserved
Download as DOC, PDF, TXT or read online from Scribd
Download as doc, pdf, or txt
17 views2 pages

Individual Assignment (Managerial Economics)

Uploaded by

msesret

Copyright:

© All Rights Reserved
Download as DOC, PDF, TXT or read online from Scribd
Download as doc, pdf, or txt
You are on page 1/ 2

Rift Valley University- MBA Program

Individual Assignment on Managerial Economic

1. Determine which of two investment projects a manager should choose if the discount rate of the firm
is 10%. The first project promises a profit of ETB 2,000, 000 in each of the next four years, while the
second project promises a profit of ETB 1, 500, 000 in each of the next six years.
a) Which project should the manager choose if the discount rate of the firm is 20%?
b) Explain the effect that the timing in the receipt of the profits from project1 and project 2 has
on present value of the two investment projects.
2. A woman managing a photocopying establishment for ETB 500,000 per year decides to open her own
duplicating place. Her revenue during the first year operation is ETB 2,400, 000 and her expenses are
as follows with the current interest rate of 10%:
Expenses ETB Expenses ETB
Salaries to workers ……………… 900,000 Utilities ………………… 20,000
Supplies …………………………. 300,000 Interest on bank loan….... 200,000
Rent ………………………………. 100,000

a) Compute explicit and implicit costs? b) Calculate the economic profit and the business profit
c) Should the woman make the new business decision?
Why?

3. Suppose cost ( C) and revenue (R) functions are given as:


&
Find: a) Profit maximizing output and price b) maximum profit

4. Given the following TR and TC function of a firm: (3Pts)

a) Determine the level of P and Q to maximize profit and


b) Compute profit or loss and determine the decision of the firm.
5. Suppose Pepsi Cola estimates that a sale of its drink is a function of its advertisement expenditure
(measured in ETB) in two different media, television and news papers. If X stands for advertisement
expenditure in ETB on a advertisement on television and Y stands for expenditure in ETB on
advertisement in newspapers, sales of Pepsi Cola given by:

Assume that the advertisement budget is restricted to ETB 20 so that X + Y =20

1
a) Find the amount of expenditure incurred in television and news paper (measured in ETB)
(2Pts)
b) Calculate the sales of the firm at this constrained optimum level (2Pts)

6. A firm faces the production function . It can buy inputs K and L for ETB 400 a unit
and ETB 200 a unit respectively. What combination of L and K should be used to maximize output?
(2Pts)

7. For the following profit function of a firm: (3Pts)

a) Determine the level of each output that maximizes profit?


b) Determine the maximum total profit?

8. A company produces two goods X and Y. The profit function of the company as follows:
the company is under obligation to produce
combined output of 30 units. Find the units of X and Y subject to a total of 30 units that
maximize profit using Lagrangian multiplier method. (2Pts)

9. Suppose demand and supply functions are given by: (2Pts)

a. Determine equilibrium P and Q in this market b. Use graph to show market equilibrium?

10. The demand function equation faced by Awash International Bank (AIB) for its personal computers
is given by: (3Pts)

a. Write the marginal revenue (MR) equation? b. At what price and quantity
c. At what price MR will be zero? will TR be maximized?

11. Assume that the company uses the 4-months moving average to forecast the sales volume for month
March. In this regard, the sales volume for month March has been forecasted to be 160 units on the
basis of the sales of 120, 140, 150 units of month November, December and January respectively.
Thus, what was the sales volume of month February? (3Points).

You might also like