End term Examination for Managerial Economics, 2014-15
Maximum Marks: 100
Time: 150 minutes
MULTIPLE CHOICES. Answer all questions in this group. Each question has one mark.
Choose the one alternative that best completes the statement or ans
Chapter 2: The Basics of Supply and Demand
1. Suppose the demand curve for a product is given by Q = 300 — 2P + 41, where I is average
income measured in thousands of dollars. The supply curve is Q = 3P — 50.
a. If] = 25, find the market clearin
THE TECHNOLOGY OF PRODUCTION
factors of production Inputs into the production
process (e.g., labor, capital, and materials).
The Production Function
q F ( K , L)
production function: Function showing the highes
CONSUMER AND PRODUCER SURPLUS
Consumer and Producer Surplus
Consumer and Producer
Consumer A would pay $10
for a good whose market
price is $5 and therefore
enjoys a benefit of $5.
Consumer B enjoys a
Project: 20% (Max 4 in each group;
members of the groups need to be
communicated by next class in an excel
sheet group number and mem
PERFECTLY COMPETITIVE MARKETS
The model of perfect competition rests
on three basic assumptions:
(1) price taking,
(2) product homogeneity, and
(3) free entry and exit.
MARGINAL REVENUE, MARGINAL COST,
AND PROFIT MAXIM
Likelihood that a given outcome will occur.
Subjective probability is the perception that an outcome will occur.
expected value Probability-weighted average of the
Charging different prices for a product
when the price differences are not
justified by cost differences.
Objective of the firm is to attain higher
profits than would be available