NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF MANAGEMENT SCIENCES
MARCH/APRIL 2015 EXAMINATION

COURSE CODE:                                                                              MGS 303                                                             

COURSE TITLE:                                                                             Managerial Economics

DURATION:                                                                                     2 Hours

INSTRUCTIONS:                                                                            1.  Attempt questions 1 and any other 2 questions.

2. Question 1 carries 30 marks, while the other 2 questions carry 20 marks each.

3. Present all your points in coherent and orderly manner.

Q1a. Suppose that the unit price of a commodity is defined by p=100-2Q then TR=PQ=(100-2Q) 100Q 2Q raise to power 2 suppose all so that the total cost of producing this commodity is defined by the cost function TC = 100+0.5Q2
(i) You are required to apply the first – order condition for profit maximization
(ii)Determine the profit –maximizing level of output
Q1b. State and describe the 2 scope of managerial economics

Q2. let the profit of an hypothetical firm be given as π=f(X,Y) = 100X – 2X 2 – XY + 180Y – 4Yraise to power 2 raise to power where X and Y represent to products X + Y =30
HINT:
Q2a. Express one of the variables (X or Y in this case ) in terms of the other and solve the constraint equation for one of them (X or Y)
Q2b. substitute the solution obtained into the objective function (that is the function to be maximized or the profit function) and solve the outcome for the other variable

Q3. List and explain the importance features of decision making in business

Q4. State and discuss the 5 theories of profit

5. Explain the marginal conditions of profit maximization

6. List and describe the 4 types of demand encountered in business.