ASSIGNMENT -1(MARKS-15)

1. ABC Corporation has sales figures as given below.

Year 2012 2013 2014 2015 2016 2017 2018 2019 2020

Sales(M 55 57 60 64 65 71 70 76 79
n $)

Forecast sales for 2021 using

(a) the trend line method. Mention the equation and the R square value obtained.
(b) Three year moving average method.
( c) Exponential Smoothening Method with a smoothening constant of 0.8.
2. The demand equation and supply equation for a product are P=100-Q; P=20+0.5Q respectively. The same are
shown in the figure below:

a. Find the equation for marginal revenues.

Answer:
The Equation of the Marginal Revenue Line.
MR = a – 2b Q

Given Demand Equation P = 100 – Q => a = 100, b =1

Therefore, MR for the demand equation = 100 – 2Q

Given Supply Equation P = 20 + 0.5 Q => a = 20, b =0.5

Therefore, MR for the supply equation = 20 + Q

b. What would be the output of profit maximizing form

Answer:
Profit maximization, MR = MC
c. Calculate consumer surplus and producer surplus at this level of output

Answer:

d. What is the deadweight loss.

Answer:

e. What is the point of market equilibrium?

Answer:
Demand = Supply when equilibrium price is reached
P = 100 – Q = 20+ 0.5Q
1.5 Q = 80
Q = 80 / 1.5 = 53.33
Substituting Q in demand equation
P = 100 – Q = 100 – 53.33 = 46.67
Therefor the point of market equilibrium is (53.33, 46.67)
3. A patient is on low carbohydrate diet. He has the option of eating only three foods rice, roti and daal. The
marginal utility for each food is tabulated below. The patient can consume only 167 grams carbohydrate daily.
Rice, roti and daal has 25, 6 and 10 grams of carbohydrate par plate respectively. Which of the following plates is
the best consumption option for the patient?
Plates Marginal Utility of Marginal Utility Marginal Utility Dal
Rice Roti
1 175 72 90

2 150 66 80

3 125 60 70

4 100 54 60

5 75 48 50

6 50 36 40

7 25 30 30

8 25 18 20