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MS-09 JAN JUNE 2016 SOLVED ASSIGNMENT
- 1. Sample Solved Assignment MS-09 Jan June 2016 Course Code MS-09 Course Title Managerial Economics Assignment Code MS-09/ TMA/SEM - I/2016 Assignment Coverage All Blocks MBA Help Material Provided by Unique Tech Publication Unauthorized copying, selling and redistribution of the content is prohibited. This Material is provided for your reference only. The utility of this content will be lost by sharing. Please do not share this material with others. To know price of this assignment & For more inquiry visit: http://ignousolvedassignmentsmba.blogspot.in/ Dharmendra Kumar Singh Dharmendra Kumar Singh Mail us on - ignousolvedassignmentsmba@gmail.com School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI – 110 068
- 2. This is sample copy, Only for viewing. You cannot copy or take print of this copy. 1. “Sales- revenue maximization” is the main objective of a firm. Discuss this statement with the help of an example. According to Prof. Baumol the ultimate objective of firm is sales maximisation rather than the profit maximisation. ------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------, as may profit making firms faced with certain situations, or employing certain strategies. An example of -------------------------------------------------------------- ---------------------------------------------------------------------, a firm may reduce price to drive rivals out of the market. Sales maximisation means achieving -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- Managers are more interested in firm size than profits. Size leads to greater monetary and non-monetary rewards. For example, managers ----------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ boss richer. There is ------------------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------. Large sales, growing over time, give prestige to the managers, while large profits go into the pockets of shareholders. An alternative view was put forward by Oliver Williamson (---------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------
- 3. Assuming that the firm’s costs remain the same, a firm will choose a lower price and supply a higher output when sales revenue maximisation is the main objective. The profit maximising price is P1 at output Q1, the revenue maximising price is P2 at output Q2 Consumer surplus is ---------------------------------------------------------------------------------------. Producer surplus is greater when profits are maximised. --------------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- Firms prefer maximization of sales revenue for various Reason: 1. ------------------------------------------------- and strength of the firm in terms of rate of growth of its growth. 2. ------------------------------------------------------------------------- more closely with sales than with profit. 3. Increasing sales revenue over a ------------------------------------------------------------------------------------------------------------------ ----- the shareholders. 4. Growing ------------------------------------------------------------------------------------------------ results in a healthy personal policy 5. Large and increasing sales help -------------------------------------------------------------------------------- competitive power. Assumption: 1. Sales ---------------------------------------------------------------does not give a clear definition of minimum profit. It may be defined as the “ -----------------------------------------------------------, to reinvest for growth and ensure financial safety”. 2. Advertisement ------------------------------------------------------------------------------- curve to the right. 3. Advertisement --------------------------------------------------production cost 4.Price ----------------------------------------------------------------------------------------------- Arguments in favour of Maximisation of Sales Goal Following arguments are given in favour of maximisation of sales goal: i. More Realistic: -------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ii. More Practical: Revenue maximisation thesis of Baumol is more practical. It is so because goal of revenue (Sales)
- 4. maximisation leads to -------------------------------------------------------------------------------------------------------------. They also endorse this goal of the firms. iii. More Availability of Loans: At the time of ------------------------------------------------------------------------------------------------- ------------------------------------------------------ for such firms as have large total sales. iv. Strong Position in the Market: Maximum sales of a firm symbolize its strong position in the market. Sales of a firm will be large only -----------------------------------------------------------------------------------------------------------------. All these features are indicative of the progress of the firm. v. More Advantageous to the Managers: -------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ---------------------------. II is the constant endeavour of the managers to maximize the sales of the firm after attaining a given level of profit. 2. “The main determinant of elasticity is the availability of substitutes.” Explain this statement in the context of price elasticity of demand. Determinants of price Elasticity of demand: In general three factors determine the price elasticity of demand. They are as follows 1) ------------------------------------- 2----------------------- Income Spent: 3) Time ----------------------------- The main determinant of elasticity is the availability of substitutes. --------------------------------------------------------------------- ---------------------------------------------------there are a few adequate substitutes. Movies are a good example. -------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------close substitute exists for the product being advertised, thereby rendering the consumers demand relatively inelastic. Demand and supply elasticities depend on the ease with which buyers and sellers can switch between substitute goods. Greater choices mean more elastic and fewer choices mean less elastic. Elastic Demand: In ---------------------------------------------------------------------------------------------------------- tends to be very elastic. Consider the example of Auntie Noodles Frozen Macaroni Dinner, an enjoyable, nutritious, and satisfying meal. Unfortunately for the Auntie Noodles company, it is only one of thousands of comparable food products on the market, making demand extremely elastic.
- 5. ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ The wide range of very close substitutes for Auntie Noodles Frozen Macaroni Dinner means that the price elasticity of demand for Auntie Noodles -------------------------------------------------------------------------------------------------------------- ----------------------------------------------, teeny, tiny bit, potential buyers are bound to forego Auntie Noodles Frozen Macaroni Dinner in favor of the very close substitutes. Inelastic Demand: Alternatively, a good with few close substitutes-in-consumption tends to be more inelastic. Consider the market for Merciless Monolithic Media Masters (4M) ---------------------------------------------------------- -------------------------------------------, the good folks of 4M provide a unique service with very few close substitutes. ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ These are not very close substitutes for 4M cable television. Seeing the Shady Valley Primadonnas in person is not the same as watching the -------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------Mulroney and his Shakespearean Players is quite different from watching television sit-coms. The lack of close substitutes means the price elasticity of demand for 4M cable television services is very small. 4M cable television can raise prices substantially without seeing many people switch to the alternatives. Elastic Supply: In terms of price elasticity of supply, -------------------------------------------------------- to be very elastic. The key for supply is the ease of switching resources between the production of two or more goods ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ --------------------Max Mulroney's Pretzels-on-a-stick is easily switched to the production of Manny Mustard's Deluxe Club Sandwiches. As such, the ------------------------------------------------------------------------------------------- price of Manny Mustard's Deluxe Club Sandwiches is bound to trigger relatively large changes in the quantity supplied as resource inputs are easily switched among substitutes.
- 6. Inelastic Supply: Alternatively, the production of a good with few close substitutes-in-production tends to have a relatively small price elasticity of supply. ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ --------------------As such, the price elasticity of supply of Shady Valley Primadonnas baseball entertainment is likely to be quite low. Relatively large changes in the price of Shady Valley Primadonnas baseball entertainment is needed to induce relatively small changes in the quantity supplied. --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- Demand is more elastic (a) the greater the availability of substitutes; (b) the more narrowly the good is defined; (c) the larger the share of the consumer‘s budget spent on the good; and (d) the longer the time period consumers have to adjust to a change in price. --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- Income elasticity of demand measures the responsiveness of demand to changes in consumer income. Income elasticity is positive for normal goods and negative for inferior goods. ------------------------------------------------------------------------------------ ----------------------------------------------------------------------------. Two goods are defined as substitutes, complements, or unrelated, depending on whether their cross-price elasticity of demand is positive, negative, or zero, respectively. 3. Answer the following:- (a) Explain average cost and marginal cost Average cost- In economics, average cost and/or unit ----------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- ------------------------be expensive or impossible in the short term, for example). Average costs affect the supply curve and are a fundamental component of supply and demand.
- 7. --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------- Marginal cost - In economics, marginal ------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------. In general terms, marginal cost at each level of production includes any additional costs required to produce the next unit. For example, ---------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- If the cost function is differentiable joining, the marginal cost is the cost of the next unit produced referring to the basic volume. ------------------------------------------------------------------------------------------------------- Marginal cost includes all of the costs that vary with the level of production. For example, -------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- Relationship between Average and Marginal Cost Average cost and marginal cost impact one another as production fluctuate: ==================================================================================== (b) Find (i) marginal cost and (ii) the average cost functions for the following total cost function. Calculate them at Q=4 and Q=6
- 9. 4. Does Price Discrimination exist in the real world? Discuss with reference to any particular product or service of your choice. Price discrimination is -------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------- The term differential pricing is also used to describe ---------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- . Within the broader domain of price differentiation, a commonly accepted classification dating to the 1920s is: Personalized pricing (or first-degree price differentiation) — ---------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------- and maximizes the price that each customer is willing to pay. Group pricing (or third-degree price differentiation) — ----------------------------------------------------------------------------------- -------------------------------------------------------------------------- that simplifies the problem in face of the difficulties with personalized pricing. A typical example is student discounts. Product versioning or simply versioning (or second-degree price differentiation) — ------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------- to versioning is menu pricing. Example- When Apple Computer priced its new Power Macintosh line of computers in ------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- budgets to market research, both before launching a new product and, once launched, through the different stages of the product’s life cycle. Economists argue that the level of demand for a product at any price is the sum of what all individual consumers in the market would be willing to purchase. This demand or willingness to pay, for any product is affected by three key factors: ------------------------------------------------------------------------------------------------------- product. The price of close substitutes to the ---------------------------------------------------------------------------------- with it. --------------------------------------------------l consumer’s income. This will apply to any product, ------------------------------------------------------------------------------------------------------------- strategies adopted by firms including price discrimination. In theoretical markets there exists perfect --------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------------------------------------------
- 10. --------------------------------------------------------------------------------------, making a profit. In the real world, product heterogeneity, market frictions and moderate fixed costs allow for a level of price description in many markets. Two conditions are necessary for price discrimination: Companies --------------------------------------------------------------------------------------- of demand; They -----------------------------------------------------------------------------. For example, airlines routinely engage in price discrimination ------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------. Airlines accomplish this by imposing advance ticketing requirements or minimum stay requirements conditions that would be difficult for average business traveler to meet. Types of Price Discrimination First degree Here, the ---------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------- price for each successive unit and capture the entire consumer surplus. Remember that all forms of price discrimination involve some ------------------------------------------------------------- degree of monopoly power rarely found in the real world. Figure , First Degree Price Discrimination Common examples of first degree price --------------------------------------------------------------------------------------------------------- -------------------------------------------------- and sporting-event tickets, and road-side sellers of fruit and produce. Example 2 - A doctor who is the ------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------ to pay.
- 11. Second degree Price varies according to demand: larger quantities are available -------------------------------------------------------------------------- ----------------------------, and so they provide incentives for consumers to differentiate themselves. For example, ------------------- ---------------------------------------------------------------------------------------------. In the diagram below, we find an example of a firm charging -------------------------------------------------------------------------------- --------------------------------------------------------------------------------- Q1 and the price P2 is charged for the quantity Q*2 (the level of output such that P2 = MC -- the marginal costs of production): Figure 3, Second Degree Price Discrimination Common examples of second --------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------- fries at fast food outlets. Example 2 - The electricity ------------------------------------------------------------------------------------------- from the rate charged for the additional 100 Kwhs. Another example is railway passenger -----------------------------------------------, which declines as the distance increases. Thus the discrimination is based on volume of purchases. Third degree Price ---------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------/willingness to pay. Sellers are able to differentiate between different types of consumers. An example is -------------------------------------------------------------, it is not always advantageous to discriminate. Third degree price discrimination is the most common in actual practice in the real world, so it makes some sense to examine a detailed (and realistic) example -------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- submarkets, but the technique is entirely general and can be applied to any number of submarkets. In order for this type of price ----------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ and selling in the first market at a price slightly below P1 forcing both prices towards P*) and profiting from the price differences. The markets must be kept separate! Examples of third ------------------------------------------------------------------------------------------------------------------------- telephone service, and senior discounts. Example 2- Airline tickets are a common example -------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------- rates applicable to residential users are lower than those applied to commercial establishments and so on. Fourth degree/reverse price discrimination
- 12. Prices are the same for different customers, even if organizational costs may vary. For example, a coach class airplane passenger may -------------------------------------------------------------------------------------------- a vegetarian meal for them. Other Examples of Price Discrimination Price discrimination is very common in services where resale is not possible; an example ---------------------------------------------- ----------------------------------------------------------------------------------------. In the market for DVDs, DVD players are designed-- by law--with chips to prevent an inexpensive copy of the DVD (for example legally ----------------------------------------------------- ------------------------------------- (like the US). Price discrimination can also be seen where the requirement that goods be identical is relaxed. For example, so-called "premium products" (---------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------- that this is a form of price discrimination exercised by providing a means for consumers to reveal their willingness to pay. For instance, ---------------------------------------------------------------------- ----------------------------------------------------------------------------- difference in quality. 5. “Classification of markets is based on their characteristics.” Substantiate this statement taking examples from Monopoly and Oligopoly market structures in real world. The term ‘market’ originated from Latin word ‘------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------, ‘mutton market’, ‘meat market’, ‘vegetable market’, ‘fruit market’, ‘grain market’. For him, it is a congregation of buyers and sellers to transact a deal. Markets can be classified on different bases of -------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------- conditions. This classification is off-shoot of traditional approach. Traditionally, a market was a physical place where --------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ over a particular product or product class. Market structure can be said to be the classification or ------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------. There are different examples of the different types --------------------------------------------------------------------------------------- each type of market structure. A. On the Basis of Area: Using area, there can --------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- like fish, flowers, vegetables, eggs, milk, and others. Regional market covers a ---------------------------------------------------------------------------------------------------------------- and non durables and industrial products, including agricultural produce. In case of national ---------------------------------------------------------------------------------------------- consumer goods, industrial goods, metals, forest products, agricultural produce. In case of world or ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- in transport, storage and packaging, even the most perishable goods are sold all over the world, not that only durables.
- 13. B. On the basis of Time: The time duration is the ----------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ of different varieties may be produced or manufactured. C. On -------------------------------------------: Taking the nature of transactions, these can ------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------- while in case of future markets, transactions are finalized pending delivery and payment for future dates. D. ----------------------------------------------------: Taking regulation, markets can be ----------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------, quality, price, source changes and so on. These can be in agricultural products or produce and securities. ------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ as per the requirements of parties of exchange. E. On the Basis of Volume of Business: Taking volume of ------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- large volume business and wholesalers. On the other hand, ‘Retail’ -------------------------------------------------------------------------------------------------------------------------- ---------------- from wholesalers and sell back to consumers. F. On the basis of Nature of Goods: Taking the nature of goods, there ------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ industrial and bullion market dealing precious metals. ‘Capital’ market is a market for finance. ---------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------- and ‘foreign exchange’ market where it is a forex market dealing buying and selling of foreign currencies may be hard or soft. G. On the basis of Nature of Competition: Based on competition -------------------------------------------------------------------------------. However, only two are the most important namely, perfect and imperfect. A ‘perfect’ market is one which is characterized by: (a) ---------------------------------------------- (b) Prevalence of ------------------------------------------------- (c) The --------------------------------------------- and sellers (d) Free entry ----------------------------------------------------------------- exist hardly. The other one is ‘imperfect’ which is featured by: (a) Products ------------------------------------ (b) Different --------------------------------- of goods (c) Existence of ----------------------------------------------------------------------- of goods (d) No ----------------------------------------------------------------- buyers and sellers.
- 14. H. On the basis of Demand and Supply: Based on demand and ------------------------------------------------------------------------------------------. A seller’s market is one where sellers are in driver’s seat and the buyers are at the receiving end. In other words, it is a ---------------------------------------------------------------------------------------------------------- buyers are in commanding position. That is, supply is exceeding the demand for the goods. Classification of Markets—Modern: The modern classification is based on the consumer ----------------------------------------------------------------------------------------g- pin and a decisive driving force. Accordingly, the marketing experts ---------------------------------------------------------------------------------------------------------------- ---------, consumer, business, global and, non-profit and government markets. Consumer Markets: These markets specialize in ------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------spreads, dental cream, personal care beauty-aids, rice, wheat, oat, gourmet mixes and so on the other. Much of the brand’s strength rests on ------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------changing its colour over the period of time. Business Markets: ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- Therefore, companies selling business goods and services often face well-trained and well informed professional buyers who are skills in evaluating competitive offerings. These markets deal in raw-materials, fabricated-parts, appliances, equipments, supplies and services that become the part of end products of the business consumers. Advertising plays its due role. However, personal ------------------------------------------------------------------------------------------------ have significant role. Global Markets: Global markets consist of buyers and sellers all over the world. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------------- and challenges. To be successful, ----------------------------------------------------- to enter? How to enter each country? That is, as an exporter, license ---------------------------------------------------------------------------------------------------------------------- - product and source features to each country? How to price their products in different countries? And how to adapt their communications to differing cultures of various countries?
- 15. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------- Non-profit and Government Markets: Companies do sell their products and services to non-profit organizations like temples, churches, universities, charitable institutions and to governmental departments at local, state and central level. The companies that market their products and services have to consider the price aspect because these buyers have limited purchasing power. Again, lower ---------------------------------------------------------------------------------------------------------------- such an offering. Hence, these buyers buy through bidding where lowest bid is favoured as there is no alternative. They also need longer period of credit. An example of monopoly market ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------- differentiable products. Examples ----------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------. The two types of firm A and B will do anything to keep other firms from entering in the ladies oil supply market. The other example of market structure as defined by its characteristics is the perfect competition. The firms that operate in this market are very many and will sell closely related products. The consumers will be able to differentiate the different products and their supplier hence it is hard to overcharge consumers. An example is ----------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------. The other example of imperfect competition is the ------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Oligopolies are prevalent throughout ------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------to higher prices for consumers. Specific Current Examples of Oligopolies 1. National mass media and news outlets are a prime example ----------------------------------------------------------------------- -------------------------------------------------------------------, NBC Universal and Rupert Murdoch’s News Corporation. 2. Operating systems for smartphones and computers provide excellent current examples -------------------------------------- ------------------------------------------------------------------------------------------------------------------------------ systems are overshadowed by Apple and Windows. 3. The auto industry is another example of an oligopoly, ----------------------------------------------------------------------------- -------------------------------------r. 4. -------------------------------------------------------------------------------------------------------- the industry are Verizon, Sprint, AT&T and T-Mobile. 5. The music entertainment -----------------------------------------------------------------------------, Warner and EMI Group.
- 16. 6. Write short notes on the following:- (a) The Law of Demand Law of demand states that other things being equal, the demand for a product is inversely proportional to the price of the product. In other words, the demand is higher at lower prices and lowers at higher prices under the assumption of ceteris paribus (i.e. other things being equal). The other-things-being-equal ----------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- the price-demand relationship by assuming that all other demand-affecting factors are constant. Mathematical expression Mathematically, the inverse relationship may be expressed as a causal relation: where is the quantity demanded of good x, is the price of the good, is the demand function, and is its derivative. Here, is the causal factor (independent variable) and Is the dependent variable. ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------ ======================================================================================= (b) Peak Load Pricing Peak-load pricing is a pricing technique applied to public goods, which is a particular case of ----------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- of the day, month or year, then finding the optimal capacity (quantity supplied) and, afterwards, the optimal peak-load prices. We can easily find many examples of economic behavior demonstrating the law of demand. For example, ----------------------------------------------- --------------------------------------------------------------------. Demand is the relationship between the ----------------------------------------- ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- ---------------------. The 'all other things staying the same' part is really important. There are other things that can affect demand besides price. They are prices of related goods or services, income, tastes or preferences, and expectations. For example, if ---------------------------------------------------- ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- --------------------------------------------------------------------------.
- 17. ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------cost of increasing capacity. For example, cell --------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- With the optimal capacity found, the optimal peak-load prices are found by adding the marginal costs of operation to the marginal benefit generated, in each period, by the optimal capacity. It may -----------------------------------------------------------------------------------------------------------------------------------, the capacity expansion will be totally supported by the peak demanders. Consider a firm that experiences two costs: a capacity cost and a marginal cost. ----------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------------------, construction, electricity, highways, and the Internet. The basic peak-load pricing problem, pioneered by Marcel Boiteux (1922– ), considers two periods. The firm’s profits are given ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------- For the sake of simplicity, we will assume that demands are independent; that is, q1 is independent of p2, and vice versa. This assumption is often unrealistic, and generalizing it actually doesn’t complicate the problem too much. The primary complication is in computing the social welfare when demands are functions of two prices. Independence is a convenient starting point. Social welfare is The Ramsey problem is to -------------------------------------------------------------------------------------------------------------------------- ------- is to instead maximize L = W+ λπ. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------- A useful notation is 1A, which is known as the indicator function of the set A. This is a function that is 1 when A is true, and zero otherwise. Using this notation, the first-order condition for the maximization of L is ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------- In Case 1, with all of the capacity charge allocated to -------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- 18. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------- would make Period 2 the peak. Case 2 (q1 = q2): The profit equation can be written p1(q) – mc + p2(q) – mc = β. This equation determines q, and prices are determined from demand. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------- Moreover, the price (or, more properly, the markup over marginal cost) is proportional to the inverse of the elasticity, which is known as Ramsey pricing. ===================================================================================== (c) Alternative costs. Alternative Costs provide a complete costs drafting service to remove the headache from our clients in dealing with costs recovery. We have a wealth of experience in both receiving and paying party cases. Follow the link below for a comprehensive list of services we are able to offer. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------. While taking a decision among several alternatives, a manager selects the best one which is more profitable or beneficial by sacrificing other alternatives. For example, a firm may decide to buy a computer which --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------buying a computer. Thus, a firm has to take a number of decisions almost daily. Our prompt, efficient and confidential service – matched with highly competitive rates – allows you to concentrate on earning fees rather than wasting time chasing them.A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------- Production Possibilities Curve - a graph -------------------------------------------------------------------------------------------------------- --------------------------------------------------- given the full and efficient use of all available resources. Opportunity Cost:-The cost of an alternative --------------------------------------------------------------------------------------------------- --------------------------------------- by taking an alternative action Opportunity Cost and the PPC: The ------------------------------------------------- has two significant characteristics: The opportunity cost of going to college is the money you would have earned if you worked instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages. Here's another example: if ------------------------------------------------------------------------------------------------------------------------- -------------------------------------.).
- 19. In both cases, a choice between two options must be made. It would be an easy decision if you knew the end outcome; however, the risk that you could achieve greater "benefits" (be they monetary or otherwise) with another option is the opportunity cost. I am sending you solution of one question of MS-09 assignment as Demo. If you like the quality of solution then you can buy this. Assignments Code Assignment Name Price (Rs.) MS-09 Managerial Economics 150 Following options are available in our below mentioned Account. 1. Click on below link and purchase online from web store This method is very simple. In this method you can purchase assignments like anything you purchases online. Here you can directly pay using your debit card/ credit card/ net banking within seconds. This is a faster method and you will get assignments faster than any other method. https://www.payumoney.com/store/buy/mba-jan-june-2016-solved-assignments 2. If you have Paytm App then you can send money direct to our Paytm wallet using our mail id ignousolvedassignmentsmba@gmail.com or mobile no 8604607390 3. If you have MobiKwik App then you can send money direct to our MobiKwik wallet using our mail id mobile no 8604607390 4. ONLINE TRANSFER USING NET BANKING: Bank details are given below along with IFSC code of the bank branch. You can transfer funds online conveniently from your home/office without any extra charges.
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