NATIONAL OPEN UNIVERSITY OF NIGERIA

UNIVERSITY VILLAGE, PLOT 91, CASDASTRAL ZONE, NNAMDI AZIKIWE EXPRESS WAY, JABI, ABUJA.
FACULTY OF ARTS AND SOCIAL SCIENCES
SEPTEMBER 2020 EXAMINATION

COURSE TITLE: MANAGERIAL ECONOMICS
COURSE CODE: ECO 824
UNITS: 3.
TIME ALLOWED: 3 HOURS
INSTRUCTION: ANSWER QUESTION (ONE) AND ANY OTHER (THREE)

Question 1
1(a) Define Total Revenue (TR). (5Marks)
1(b) Define Marginal Revenue (MR). (5Marks)
1 (c) Find the level of quantity for which revenue will be maximized if the price function is given by P= 100-5Q. (10Marks)
1 (d) Obtain the maximum Total Revenue (TR) from the maximum quantity obtained from 1 (c) above. (5Marks)

Question 2
The scope of managerial economics extends to those economic concepts, theories, and tools of analysis used in analysing the business environment, and to find solutions to practical business problems. In line with this concept, outline the scope of Managerial Economics in relation to internal and external issues. (15 marks)

Question 3
With the aid of a diagram explain the Short Run Monopoly Equilibrium with Positive Profit (15 mark)

Question 4
a) Distinguish between certainty and uncertainty in decision analysis (5 marks)
b) A simple macroeconomic model is given as Y = C + I + G + X; where, Y= Gross National Product (GNP); C = Total consumption expenditure; I = Gross Private Investment; G = Government expenditure; X = Net Export (X – M), where X represents Export, and M, Import. Subscript t represents a given time unit. Such as: C = a + bY; I =
20; G = 10;
X = 5.
Find;
i. the value of Gross National Product (GNP) (6 marks)
ii. total consumption expenditure (4 marks)

Question 5
a) Derive and explain the relationship between the price elasticity of demand and marginal revenue. (10 marks)
b) What factors determine the price elasticity of demand for a product? (5 marks)2

Question 6
Explain briefly and distinguish between
a) Opportunity Costs and Explicit Costs (4 marks)
b) Short-run Cost and Long-run Costs (4 marks)
c) Fixed Costs and Variable Costs (4 marks)
d) Private Costs and Social Costs (3 marks)