Find your question
and Get expert's answers*
Homework Help
*Click here to submit
Refer a Friend
Discount up to 15%*
Prepared References
Save up to 50%*
Homework Help >> Managerial Economics
  Explaining opportunity cost and discounting principle  

Attempt all the questions.


Question1) What are the key points in short run production functions which delineate three stages of production? Describe the relationship between law of diminishing return and three stages of production.

Question2) “Because of economics of scale, it is sometimes more cost effective for a firm to operate a large plant at less than maximum efficiency than the small plant at maximum efficiency”.  Do you agree with this statement?  Describe.

Question3) Describe the following concepts with appropriate example.

(a) Opportunity Cost

(b) Discounting principle

Question4) “Managerial economics involves use of economic analysis to make business decisions involving the best use of a firm’s scarce resources” Describe the statement with appropriate example.


Case Study

Travel Company has hired the management consulting company to analyze demand in 26 regional markets for one of its major products: a guided tour to the particular country.  Consultant uses data to estimate the following equation:

Q = 1,500 = 4P + 5A+ 10I +3PX

where  Q = amount of the product demanded

P = price of the product in dollars
A= advertising expenditures in thousands of dollars.
I = income in thousands of dollars
PX = price of some other travel products offered by a competing travel company


a) Compute amount demanded for this product using the following data:

P = $400
A= $20,000
I = $15,000
PX = $500                                        

b) Assume the competitor reduced price of its travel products to $400 to match price of this firm’s product.  How much will this firm have to increase its advertising in order to counteract the drop in its competitor’s price?  Will it be worth it for them to do so?  Describe.                    

c) What other variables might be important in helping estimate the demand for this travel product?

Ask an Expert for Solution

Ask an Expert for Answer Explaining opportunity cost and discounting principle

Request for Solution Files

Expected delivery within 24 Hours

Course: Managerial Economics

Ref. No:- TGS03233

Like US:-
Assignment Help

Ask an Expert & Get Answer

  • Quality work delivery
  • 100% Plagiarism free
  • Time on delivery
  • Privacy of work
Order Now
More Managerial Economics Questions

disadvantages of perfect competition there is a great deal of duplication of production and distribution facilities amongst firms and consequent
define scarcity and opportunity costshow how these concept are useful in managerial decision
q what is data miningdata mining data mining is the process of extracting patterns from data data mining is seen as an increasingly important tool by
perfectly elastic supplysupply is said to be perfectly or infinitely elastic if the price is fixed at all levels of demand the demand curve has
suppose that the price elasticity of demand for cereal is -075 and the cross-price elasticity of demand between cereal and the price of milk is -09
.How can the field of OB contribute to the effective functioning of organizations and the well being of the individual.
the neo-classical viewthe neo-classical view is that market forces are the best directors of the economy positive attempts by the government it
householdthis refers to all the people who live under one roof and who make or are subject to others making for them joint financial decisions the
1 solve the following linear programming problem graphicallymaximize 2x1 3x2subject to x1 le
give short answer of followinga economics as a scienceb engineering economicsc economic problemd meaning and characteristics of utilitye