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.