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# SEMESTER SPRING 2012 Managerial Economics (ECO404) Assignment No. 01 Due Date: 26th April, 2012 Marks: 15

SEMESTER SPRING 2012
Managerial Economics (ECO404)
Assignment No. 01
Due Date: 26th April, 2012 Marks: 15

SEMESTER SPRING 2012
Managerial Economics (ECO404)
Assignment No. 01
Due Date: 26th April, 2012 Marks: 15
The Case:
Gujranwala is well known for the production and distribution of ceramics products. Ilyas
Sanitary firm is one of the major manufacturers of sanitary goods in Gujranwala. The firm
was started in 1978. This firm not only manufactures sanitary goods for Pakistan but also
exports its products to other countries. Suppose, this firm has 500 employees and it is paying
total amount of Rs. 7.5 million to these employees. The average salary of the employees is
Rs.15, 000. The firm is paying Rs. 2 million as interest payments to various banks. The
entrepreneur has a salary offer of Rs. 1.5 million annual from another company but he
refuses it for the sake of his own business. Further, firm is paying a total of Rs. 3 million as
operating lease of various plants. The firm is in the monopolistic competition where it has to
compete in the market with several other firms. The price elasticity of demand for the goods
of this company is -2.5. The firm is earning higher profit as its marginal revenue is equal to
the marginal cost. The marginal revenue and marginal cost of the firm is Rs. 240. The firm
wants to earn more profit by providing its products at lower rate.
Question # 01
From the information given above, calculate optimal level of price that firm should set to
obtain higher level of profit.
(Marks: 7)
Question # 02
The total cost function of the Illyas Sanitary firm is given as follows:
TC = 10+ 5Q+ 15Q2
From the above given equation, calculate:
A. Variable cost of the firm
B. Average total cost of the firm
C. Average variable cost of the firm
(Marks: A=2, B=3, C = 3)
Instructions:
· Write down formula and all relevant steps involved in calculations
· 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. 1 to lecture no 14 and reading handouts as well as
recommended text book.
Note:
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
inconvenience.
Important Instructions:
· Make sure that you upload the solution file before the due date. No
assignment will be accepted through e-mail once the solution has been
Formatting guidelines:
· Use the font style “Times New Roman”/ “Arial” and font size “12”.
· Use black and blue font colors only.
Solution guidelines:
· Every student will work individually and has to write in the form of an
analytical assignment.
· Give the answer according to question.
· For acquiring the relevant knowledge don’t rely only on handouts but watch
the video lectures and use other reference books also.
Rules for Marking
· It has been submitted after due date
· The file you uploaded does not open or is corrupt
· It is in any format other than .doc (MS. Word)
It is cheated or copied from other students, internet, books, journals etc…
Important Note for those courses where calculations and graphs are
required.
· Calculate to the point where calculation is being required. NO need to write
irrelevant material or extra interpretation.
· Draw diagrams by yourself. Do NOT copy from any source. NO need to write
irrelevant material.

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### Replies to This Discussion

yr solution b koi upload ker dy na

INSHAALLAH VERY SOON

need help... couldn;t figure out the ans of first question

solution plzzzzzzzz??

Dear, if you have solved the next questions, kindly share here; I will be greatful for u.

Thanks

2nd question ker lia kya ? ager ker lia hai to us ka answer share ker dyen

saba i knw the answer for the first question but need to discuss about the other questions aswell .. hav you solved the other questions ??

plz dear post answers of both questions. plz

plz tell me solution time too short

posted the 2nd question plz chek the solution.. n write abt first question

Thanks

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