SEMESTER FALL 2020
MANAGERIAL ECONOMICS (ECO404)
ASSIGNMENT NO.2
DUE DATE: JANUARY 28, 2021
MARKS: 10
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| ECO404 (Managerial Economics) Assignment No 2 Solution semester fall 2020 has been explained in this paper in an easy to understand way for assisting readers. |
The Case:
Monopoly is a market structure in which a single firm is the sole producer of a good for which no close substitutes are available in the market. Monopoly exists when an individual producer has the ability to set market prices. Monopoly firms are price makers not price takers. WAPDA may be considered a monopoly in generating and providing electricity all over Pakistan. It was established through an Act of Parliament in 1958. It is an autonomous and statutory body under the administrative control of the Federal Government. It is working hard to harness water and hydropower resources in the country. The idea is to generate affordable, clean electricity, which will provide relief to the consumers by bringing down the power tariff. Suppose a hypothetical study was conducted on WAPDA by an economist who revealed the following total revenue and total cost functions.
TR = 100Q - 0.0005QA^2
TC = 450,285 + 10Q + 0.0004Q^2
Requirement:
Being a student of managerial economics, carefully analyze the total revenue and total cost functions and find out the:
a) Optimal level of output by using marginal revenue and marginal cost approach.
b) Maximum economic profit at this optimal level of output. (Marks: 5+5)
Note: Step wise working with FORMULAS is required. Only answers will not be acceptable.
IMPORTANT:
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OTHER IMPORTANT INSTRUCTIONS:
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Note related to load shedding: Please be proactive
Dear students!
As you know that Post- Midterm semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.