Leadstar College of Management and Leadership
Managerial Economics - Worksheet
Part-I: Give Short answer to the following questions
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8.
List the properties of indifference curve
Mention at least
east three factors that affect price
p
elasticities of demand
Why the indifference curve is assumed convex to the origin?
How do cross elasticities of demand
dem
help us distinguish between substitute and complementary goods
Distinguish between isoquant and indifference curve
Explain the different types of return to scale.
Distinguish between economies of scope, economies of
of scale and returns to scale
Distinguish between strategy and payoff concepts of game theory.
Part II: Discussion
9. Discuss the relevance of managerial economics to managers.
10. Market demand is simply the horizontal summation of what individuals pay for a sing
single unit of good
(i.e., summation of prices for a quantity).
quantity) Do you agree? Justify!
11. When the PED is <1, it means the consumers are totally unresponsive to change in price
12. Price and total revenue are positively related regardless of the PED. Do you agree? JJustify your answer
13. How do YED help us distinguish between necessity, inferior,
inferior and luxury goods?
14. What are the major characteristics of oligopoly market? How is it different from monopoly?
15. Monopoly is the only market where the firm is price maker. Do you agree?
agree? Justify!
Part II: Workout the following questions
16. Let the following diagram show the MC, AC, and demand of a hypothetical firm. Based on the figure,
answer the following question
a. In what market type the firm is operating?
b. Determine the profit maximizing/loss minimizing price and quantity
c. Is the firm making profit or loss? Show the profit or loss region.
d. Do you think that this is a long run profit/loss? Justify