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problem1. A fundamental assumption in study of businesses is that CEOs maximise profit of their companies. How far to you agree with this assumption and describe other objectives which a businessman may have.

problem2. MN Company Ltd, a computer retailer, appoints an economist to find out the demand for its product. The economist reports following equation:

Qa=10-4Pa+2Pb+3Y

Qa is the quantity demanded of the Company

Pa=price of computer

Pb=price of computers from company b

Y is income.

The current price of computer (Pa) is Rs25, Pb is Rs15 and Y is Rs30.

Required:

Using the concepts of price elasticity of demand, income elasticity of demand and cross elasticity of demand, prepare down a report to the manager to describe how the economist’s demand equation can be employed for managerial decision making.

problem3. A company wishes to launch a new quality product at a high price and realises that the market is filled with bad quality of similar products at relatively low prices. Consumers are not capable to make a distinction between the good and bad quality products. describe clearly how such condition will affect the sales of new product.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M96769

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