LOVELY PROFESSIONAL UNIVERSITY

Form/LPUO/AP-3

(The format to be used for Planning the academic activities other than Lecturers/Tutorial/Practical like Assignments, Case study, Presentation, Quiz, Projects, Class tests, industrial visits, teaching practice, court visits etc. to be undertaken as a part of the continuous assessment for the Course)

Home-Work1
School : LSB Name of the faculty member : Neha Shandilya Course No. ECO515 Class: MBA Semester I Max. Marks: 15 Department of Management Course Title: Managerial Economics Section: R1001 Date of Allotment:18/8/10

Batch 2010-12 Date of Submission: 01/09/10

S. no.

Roll No. Each student will attempt all the questions.

Topic No.

Objectives of Aca demic Activity To make the students understood of basic managerial economic concepts and how these concepts are applied in economic decision making in present day economy

Topic

Evaluation Details
Each student will attempt all the questions given in the assignment i.e. 15 questions for each student. A test will be conduct after submission of assignment. THERE IS NO MARKS FOR SUBMISSION. But only those students will be allowed to sit in test those who have submitted their assignments. 3 questions will asked in test and evaluations will be done out of 15 marks.

Date: Remarks by HOD (Mandatory)

Sign. of Faculty member

Sig. of HOD with date Remarks by HOS (Mandatory) Sig. of HOS with date

ECO515-Mangerial Economics HW-1 Note: No assignment shall be accepted after the date of submission. S.no. Topic No. 1 Rohan consumes two commodities, wheat and rice. The marginal utility derived by him from rice is two and half time the utility derived from the marginal utility of wheat. If wheat is available for Rs.12 /kg, what price will he be willing to pay for rice in order to maximize his utility? The fundamental economic problems of what to produce, how to produce and for whom to produce are solved differently by different economic systems. Discuss how a capitalist Economy solves

these problems. Tomatoes and potatoes are available for Rs. 7/kg and Rs. 10 /kg respectively. If you have an income of Rs. 35000, draw the budget line as graph. Suppose you are the manager of California winey. How would you expect the following events to affect the price you receive for a bottle of wine? a. The price of French wines decreases b. One hundred new wineries open in California c. The unemployment rate in USA decreases d. The price of cheese increases e. The price of a glass bottle increases significantly due to government anti-shatter regulations

Other things being the same what would happen to the supply of a particular product if a. price of the product decreases b. a technological breakthrough enables the good to be produced at a significantly lower cost c. the price of inputs used to produce the product increases d. the price of substitute commodity decreases e. the managers of the firms that produce that good expect the rise in price of that product in near future A) What is income consumption curve? Draw income consumption curve for a normal and inferior goods. B) Suppose the supply curve for allu tikki passes through the point P= Rs.25 and Q s=500. Give two interpretations of this point on the supply curve.

In 2003, the Men`s Hair company increased the price of its shampoo and subsequently sold more shampoo than 2002. Is the demand curve for this company positively sloped? When the demand curve slopes positively? Give an example of a product in whose case demand curve slopes positively and also explain the exceptions of law of demand. Shweta spends her whole weekly food allowance of $42 on Pizza and soft drinks. The price of single pizza is $2 and of soft drinks is $1.Shweta buys 12 pizzas and 18 soft drinks and her marginal rate of substitution between pizza and soft drinks is 1. Is Shweta in equilibrium? Explain. Suppose that a study has found that the price elasticity of demand for subway rides is 0.7 in Washington D.C., and the mayor wants to cut the operating subway system. Should the mayor contemplate increasing or decreasing the price of subway ride. Why? The price of chocolate is Rs.10 and you have to analyze the consumer behavior under cardinal utility analysis. By the assumption of constant marginal utility of money show the consumer equilibrium with the help of table and diagram. You are working for coca-cola as the market head. The company is planning to float a new drink which is white in colour. What lessons from the concept of elasticity can you draw while fixing the price for this new drink? If we do not have scarce resources, will we have a law of demand? Will we observe price rationing for goods? Give your arguments. For each of the following ,state whether economists would consider it as a resource and if they would identify which of the four types of resources the item is a. A computer used by CBI agent to track the whereabouts of suspected criminals.

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b. The office building in which CBI agent works c. The time that a CBI agent spends on a case d. A farmers tractor e. Crude oil f. A package of frozen vegetables g. plastic bags used by a company for holding its products 14 A publishing company plans to publish a book .From the sales of data of other publishers of similar books, it works out the demand function for the book as Q=5000-5p. Find outa)Demand schedule and demand curve b)no. of books sold at price Rs. 25 c)price for selling 2500 copies d)price for zero sales e)point elasticity of demand at price Rs.20 A domestic servant spends his total income only on two goods, food and clothing. Analyze the effect of increase in his income on consumption of food and clothing. Illustrate the derivation of his Income Consumption Curve.

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