SEMESTER FALL 2011
Assignment No. 2
Due Date: 27-12-2011 Marks: 30
Gandhara Nissan (GN) is an Automobile Company working under the structure of imperfect
competition. Recently, the Economic Coordination Committee (ECC) has imposed ban on
import of Compressed Natural Gas (CNG) cylinder kit and sales of car with factory fitted
CNG. This decision has been taken to overcome the prevailing shortage of gas in the
country. Gandhara Nissan has hired Mr. Umer, an economist to analyze the impact of this
ban on the company’s sales. Mr. Umer estimated that quantity sold will decrease and price
will increase in upcoming years. The data on price and quantity sold by the GN company for
the last five years and estimated data for the year 2012 is given under.
Year Price (Rs.) Units sold TC
2007 350 148 32000
2008 425 145 35000
2009 510 135 40000
2010 630 100 45000
2011 720 50 48000
1000 20 55000
Use the above information collected by Mr.Umer and:
A. Calculate average cost and average revenue of GN for each year.
B. Calculate at each level whether GN is operating at profit or loss.
C. Determine the quantity sold and price level at which the total profit for GN is
D. As a student of Economics, analyze how this incident will affect the over all
Marks: (A=6+6), (B=6+6), (C=3), (D=3)
Please read the following instructions carefully before preparing the assignment solution:
• Solution of Part A and Part B should be in the following tabulated format.
Part A Part B
AC AR TR Profit/Loss
• Calculate to the point where calculation is being required. NO need to write irrelevant
material or extra interpretation.
• This Assignment can be best attempted from the knowledge acquired after watching
video lecture no. 14 to lecture no. 25 and reading handouts as well as recommended
• Video lectures can be downloaded for free from www.youtube.com/vu
Only in the case of Assignment, 24 hours extra / grace period after the due date is
usually available to overcome uploading difficulties which may be faced by the
students on last date. This extra time should only be used to meet the emergencies and
above mentioned due dates should always be treated as final to avoid any
Other Important Instructions:
• Make sure to upload the solution file before the due date on VULMS.
• Any submission made via email after the due date will not be accepted.
• Use the font style “Times New Roman” or “Arial” and font size “12”.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.
• Every student will work individually and has to write in the form of an analytical
• Answer of part A and B should be provided in tabulated format given above. Further,
give the answer of part C and D according to the requirement of question.
• For acquiring the relevant knowledge do not rely only on handouts but watch the video
lectures and use other reference books also.
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