The document is an assignment for a Managerial Economics course. It provides instructions for students to submit the fully solved assignment by October 31, 2018. It includes 6 questions related to topics in Managerial Economics, such as the scope of the subject, laws of demand, cost functions, price discrimination, kinked demand curves, and regression equations or exponential smoothing. Students are to submit their answers to the coordinator by the given deadline.

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ASSIGNMENT
Course Code : MS-9
Course Title : Managerial Economics
Assignment Code : MS-9/TMA/SEM-II/2018
Coverage : All Blocks
Note:Attempt all the questionsand submit this assignment on or before 31st October, 2018 to the
coordinator of your study centre.
Question. 1. What is the scope of Managerial Economics? How does
the study of Managerial Economics involves the analysis of certain
major subjects? Explain citing examples.
Answer: A close interrelationshipbetweenmanagementandeconomicshadledto the development
of managerial economics.Economicanalysisisrequiredforvariousconceptssuchas demand,profit,
cost, and competition. In this way, managerial economics is considered as economics applied to
“problems of choice’’ or alternatives and allocation
Question. 2. What is the Law of Demand? Explain increase and
decrease of demand with the help of any example of your choice.
Answer:The lawof demandstatesthatquantitypurchasedvariesinverselywithprice.Inotherwords,
the higher the price, the lower the quantity demanded. The reason for this phenomenon is that
consumers'opportunitycostincreases,sotheymustgive somethingelse uporswitchto a substitute
product.
The Law of Demand in Practice
The "curve" above is simplified as a straight line, but in fact

2. Question. 3. What is Short- Run Cost Functions? Explain how Total
Cost (TC), Total Fixed Cost (TFC) and Total Variable Cost (TVC) are
calculated? Discuss with the help of a table and graph.
Answer:Conceptually,inthe shortrun,the quantityof atleastone inputisfixed andthe quantitiesof
the other inputs can be varied.
In the short-run period, factors, such as land and machinery, remain the same.
On the other hand, factors, such as labor and
Question. 4. Differentiate between First Degree and Second Degree
Price Discrimination. Why is Second Degree Price Discrimination
described as multipart pricing?
Answer:Price discriminationreferstothe chargingof differentpricesbythe monopolistforthe same
product.
The differenceinthe productmaybe onthe basisof brand,wrapperetc.Thispolicyof the monopolist
is called price discrimination.
Types of Discriminating Monopoly:
Price discrimination is of following three types:
Question. 5. Examine the kink demand curve for oligopolists? Explain
the reasons for price rigidity.
Answer: There isno single theoryof oligopoly.The twothatare mostfrequentlydiscussed,however,
are the kinked‐demandtheoryandthe cartel theory.The kinked‐demandtheoryisillustratedinFigure
and applies to oligopolistic marketswhere each firm sells a differentiatedproduct. Accordingto the
kinked‐demandtheory,eachfirmwill face twomarketdemandcurvesfor itsproduct. At highprices,
the firm faces the relatively elastic market demand curve, labeled MD1 in Figure.
Question. 6. Write short notes on any two of the following:-
(a) Regression Equation
Answer:Linearregressionattemptstomodelthe relationshipbetweentwovariablesbyfittingalinear
equationtoobserveddata.One variable isconsideredtobe an explanatoryvariable,andthe other is
considered to be a dependent variable. For example, a modeler might want to relate the weights of
individuals to their heights using a linear regression model.

3. Before attempting to fit a linear model to observed data, a modeler should first determine whether
or not there is a relationship between the variablesof interest. This does not necessarily implythat
one variable causesthe other(forexample,higherSATscoresdonotcause highercollegegrades),but
(b) Exponential Smoothing
Answer:Thisis a verypopularscheme toproduce asmoothedTime Series.WhereasinSingleMoving
Averages the past observations are weighted equally, Exponential Smoothing assigns exponentially
decreasing weights as the
(c) Functional Forms of Cost Functions
Answer: The principles of production theory discussed in Unit 7 are fundamental in understanding
economics and provide an important conceptual framework for analysing managerial problems.
However, short run output decisions and long run planning often require more than just this
conceptual framework. That is, quantitative
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