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Nmims Sloved Assigment
Nmims Sloved Assigment
Q1. “The technique of indifference curves has been used not only to explain consumer’s
behaviour and demand but also to analyse and explain several other economic problems
“In view to the above statement elaborate about indifference curve and its properties.
(10 Marks)
Ans 1.
Introduction
An indifference curve can be defined as a visual representation of different combinations or
consumption bundles of two commodities or goods, giving equivalent complete satisfaction
levels for the customer. Simply put, a customer is considered detached between any two
mixes, indicated by a specific factor on the curve, given these bundles give the same energy.
In business economics, the indifference curve examines demand patterns for good
combinations. The concept applies to far better economics and microeconomics, such as
customer and manufacturer equilibrium, exchange dimension, customer surplus, etc.
It can likewise be referred to as a chart showing a different mix of 2 goods similarly
satisfying the consumer.
For example- if a person likes both hamburgers and hot dogs, he might need to be more
generous to acquire 20 hamburgers and no hotdogs, 45 hotdogs and no burgers, or some mix
of both.
Q2. Find below hypothetical data for total production costs of a manufacturing firm at
various levels of output. Complete the following: (10 Marks)
Output Total cost Fixed cost Variable cost Average Average Average
fixed cost variable cost
cost
0 1000 1000
20 1200 1000
40 1300 1000
60 1380 1000
100 1600 1000
Ans 2.
Introduction
The total cost can be defined as the actual cost sustained in the production procedure of a
provided outcome degree. But, the total expenses sustained by a company, both specific and
implicit, on all the sources to acquire a certain result level is called total cost. The total cost is
the amount of all the variable and fixed costs. Hence, total cost includes the resources needed
to produce a specific output level.
Experts frequently utilize two-factor inputs in the total cost, capital, and labor. The capital
employed in business is considered a fixed cost. A company has to incur it regardless of the
production activity. Even if the company creates 0 units, it cannot ignore its fixed costs.
While labor is a variable cost, it differs from the change in manufacturing value. That
indicates it relies on the production ability of the company. If the company is making a high
quantity of goods, it has to sustain high variable costs and the other way around.
Conclusion
We can end this by saying that every cost is directly and indirectly related to a business's
working. The organization invests these costs to make the company work and generate and
sell its product or services. For this function, a company needs to employ superior ability
with loved one experience. If worked with precisely, it can reduce numerous costs by
accumulating and studying all the costs spent by the company. These costs can be used to
predict future events as the company can use the accumulated information to anticipate future
tasks. All the above costs need to be computed with 100 percent precision as there is no scope
for blunders because they can result in hefty losses for the company.
Q3a. Large scale production is considered to be economical in the sense of per unit cost.
Explain the statement by describing different types of economies of scale. Give
examples to substantiate your answer (5 Marks)
Ans 3a.
Introduction
Large-scale manufacturing refers to making a product on a bigger scale with a large
organization. It requires substantial funds that can be accumulated by numerous considerable
financial investments directed toward purchasing hefty plants and machinery. Large-scale
manufacturing can just be carried out if the marketplace is broadening significantly.
Conclusion
The bigger the business remains regarding the dimension of profits and amount of
manufacturing, the much less the average price of production will be. Thus, the clients will
enjoy their favorite products at significantly reduced prices.
Q3b. Elaborate Cross Demand, Composite Demand and Derived Demand and cite an
example to enumerate these types of demand. (5 Marks)
Ans 3b.
Introduction
The cross elasticity of demand can be specified as an economic concept that gauges and
establishes the responsiveness in quantity demanded of one item when the rate of additional
product adjustments. Also called cross-price elasticity demand, this dimension is constantly
determined by taking the percent variation in the amount demanded of one product and
dividing it by the percentage adjustment in the cost of the various other great.
Conclusion
Every demand is vital for the market as it plays a crucial role in the smooth running of the
industry. The market entirely depends upon consumer demand to ensure that it can offer the
wanted items and make considerable earnings.