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# ECO404 1st Assignment fall 2012

MANAGERIAL ECONOMICS (ECO404)
FALL 2012
ASSIGNMENT NO. 1
DUE DATE: 22 NOVEMBER 2012
MARKS: 30
ASSIGNMENT:
The Case:
Mr. Ahmad starts his business by opening a fast food restaurant named ABC chicken burgers. He has his competitor named XYZ chicken burgers in the same locality. Along with this business, he is also studying managerial economics in a private institute that’s why he realizes the importance of elasticity in the business field. He knows that elasticity plays very important role in business decision making. He wants to apply the knowledge of managerial economics in his business for profit maximization that’s why he is eager to estimate various types of elasticity for his product with respect to the factors that affect the demand of his product like price, income, price of substitutes, price of compliments, advertising etc.
For this purpose, he collects the data and estimates the following regression equation:
QABC = 1.8 - 5.2PABC + 0.9Y + 2.01PXYZ – 0.64PC + 1.25A
Where,
QABC = Sales of ABC burgers per year
PABC = Price of ABC burgers in rupees
Y = Disposable personal income in rupees per year
PXYZ = Price of the competitive XYZ burgers in rupees
PC = Price of chicken
A = Advertising expenditures for ABC burgers in rupees per year
Requirement:
If PABC = Rs.90, Y = Rs.10, 000, PXYZ = Rs.85, PC = Rs.130, and A = Rs.100, then calculate:
a) Sales of ABC burgers per year
b) Price elasticity of demand (EP) for ABC burgers
c) Income elasticity of demand (EY)for ABC burgers
d) Cross price elasticity of demand (EABC.XYZ) for ABC burgers with respect to the price of XYZ burgers
e) Cross price elasticity of demand (EABC.C) for ABC burgers with respect to the price of chicken
f) Elasticity of demand (EA) with respect to the advertising expenditures
(Marks: 5+5+5+5+5+5)
Outcomes:
IMPORTANT:
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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.
FORMATTING GUIDELINES:
• Use the font style “Times New Roman” or “Arial” and font size “12”.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.
REFERENCING GuIDELINES:
• Use APA style for referencing and citation. For guidance search “APA reference style” in Google and read various website containing information for better understanding or visit http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
• It is submitted after the due date.
• The file you uploaded does not open or is corrupt.
• It is in any format other than MS-Word or Open Office; e.g. Excel

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### Replies to This Discussion

Assignment No.1 Fall 2012 Solution Eco 404
QABC=8747
EP=-0.054
EY=1.02
EABC,XYZ=0.875
EABC,C=-0.0096
EA=0.0144

Tariq ap k complt answers sahi hai bs EABC,XYZ ka answer wrong hai again check karyn ... is ka answer 0.0195 hai...check it and confirm me...

Usman dar kindly share your idea regading to solution of the assignment ................. Need to understand Formulas................... ?

Yara complete solution share karo because agar kesse ka wrong ho ga tu wo at least discuss tu kar sakta hai............ So kindly share complete solution on early basis.........

+ M.Tariq Malik + share complete idea solution................. So we can discuss this assignment.............

ye kase ap nay calculate kiya hai kindly plz bta daye]

Our main purpose here discussion not just Solution

Any idea solution?

tariq bhi plz discuss or kare kuch samaj nahe a rha

Ye uper values ap nay kase calculate kar li tell me plz

ye uper wale values kase calculate hue hai tariq bhi plz tel me

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