Managerial Economics [EMBA 508]

EMBA Program, Spring 2020

Time:

Any of three (03) questions:

1. Write down the scope of managerial economics in decision making process of a firm.
2. Why do profits vary among firms? Describe any of two profit theories with example(s).
3. Given the output (Q) and price (P) data in the following table, determine the followings:
Units of Output 0 1 2 3 4 5

Price 5.0 4.0 3.2 2.6 2.2 2.0

i. Price relation, total revenue and marginal revenue relation

ii. At what output point total revenue of the firm will be maximized?
4. Company X has the following revenue and cost relations.
𝑇𝑅 = $5,000 𝑄 − $ 0.25 𝑄 2
𝑇𝐶 = $ 7,200,000 + $ 600 𝑄 + $ 0.2 𝑄 2
i. Calculate output, marginal cost, average cost, price and profit at the average cost-minimization
activity level.
5. The following relations describe monthly demand and supply conditions in the metropolitan area for
recyclable aluminum. Here, Q is quantity measured in pounds of scrap aluminum and P is price in cents.
𝑄𝐷 = 317,500 − 10,000𝑃
𝑄𝑆 = 2,500 + 7,500𝑃
Complete the following table:
Price Quantity Supplied Quantity Demanded Surplus/Shortage

15

16

17

18

19

20