Re: ECO404 Assignment 1 Solution and Discussion

MANAGERIAL ECONOMICS (ECO404)
ASSIGNMENT
DUE DATE: 08TH JUNE, 2020 MARKS: 15
The Case:
According to the report of Asian Development Bank (ADB) Pakistan could have to face low economic growth rate during 2020 due to COVID-19. In 2019 economic growth rate was 3.3 percent while in 2020 it is projected to be 2.6 percent. Inflation will remain 11.5 percent as said in report. The lockdown situation in the country, to control COVID-19, has dampened consumer’s demand and private businesses badly. State bank of Pakistan has raised its policy interest rate to 12.25 per cent at the end of FY2019 to counter inflationary pressures. As now the decline in oil prices and expected slow demand under COVID-19, the State Bank of Pakistan reduced interest rate to 11 per cent in March 2020. ADB report predicts that inflation rate would be 8.3 percent in 2021. There is a strong direct relationship between inflation and economic growth. Supposed data of economic growth and inflation rate is given in the following table.
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Requirement:
(a) Keeping in view the above given table fill the required field.
(b) If calculated value of “t” is greater than tabulated value of “t”, what does it mean?
IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. 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
DEADLINE:
• 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”.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.
RULES FOR MARKING
Please note that your assignment will not be marked, if:
• 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,
PowerPoint, PDF etc.
• It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
Dear students!
As you know that semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

Total Marks 5
Starting Date Tuesday, January 21, 2020
Closing Date Monday, January 27, 2020
Status Open
Question Title GDB
Question Description

The Case:

Smartphones market in Pakistan is flourishing rapidly. Young people of Pakistan are mainly the users of smartphones. Samsung iPhone, QMobile, Nokia, Blackberry, HTC and OPPO etc. are primarily the smartphones sellers in Pakistan. Due to rapid development in technology smartphones prices have been declined. Smartphones companies know very well how to capture the market share and they have close eye to the prices of other companies. Leading global smartphone brand, OPPO has become number one in terms of sales volume in the Pakistani market. Among all other mobiles, smartphone shipment was 0.7 million units in the month of July 2019 and this share of smartphones is 36%. OPPO market share is 25% and Samsung share is 19%.

Requirement:

Being a student of economics identify the market structure of smartphones and also explain which type of game, smartphone sellers have to play for mutual gain?

SEMESTER FALL 2019
MANAGERIAL ECONOMICS (ECO404)
ASSIGNMENT
DUE DATE: 25 NOVEMBER, 2019
Case 1:
Competition is a subject always open to debate in health care, and pharmaceuticals are no exception. Price competition in the pharmaceuticals supplies industry is growing rapidly in the increasingly price-conscious new millennium. Ferozsons is one of the leading companies in Pakistan maintaining exclusive agreements with a number of international partners for distribution, selling and co-manufacturing of surgical products. During the past year, Ferozsons sold 7 million (700, 000, 0) units of surgical products at a price of $13.50, for total revenues of $85 million. During the current year, sale of units of surgical products have fallen from 7 million (700, 000, 0) units to 4.6 million (460, 000, 0) units following a competitor price cut from $12.95 to $10.50 per unit.
Requirement:
a. Calculate the arc cross price elasticity of demand for surgical products of Ferozesons.
b. Marketing Director of surgical system in Ferozsons, projects that unit sale will recover from 4.6 million (460, 000, 0) units to 5.8 million (580, 000, 0) units if Surgical Systems reduces its own price from $13.50 to $12.50 per unit. Calculate Surgical Systems’ implied arc price elasticity of demand.
(Marks: 4+4)
Case 2:
PEL prides itself on innovative home appliances geared towards the modern consumer. With the start of winter season PEL has announced 2% discount off the average price of refrigerators sold during the month of October in an effort to reduce excess end-of-the- model-year inventory. Customer response was wildly enthusiastic, with unit sales rising by 20% over the previous month’s level.
Requirement:
a. Calculate the point price elasticity of demand for PEL refrigerators sold during the month of August.
b. Calculate the profit-maximizing price per unit if PEL has Rs.30, 600 marginal selling costs.
(Marks: 3+4)

IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. 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.
OTHER IMPORTANT INSTRUCTIONS: DEADLINE:
 Make sure to upload the solution file before the due date on VULMS.  Anysubmissionmadeviaemailaftertheduedatewillnotbeaccepted.
FORMATTING GUIDELINES:
 Usethefontstyle“TimesNewRoman”or“Arial”andfontsize“12”.  ItisadvisedtocomposeyourdocumentinMS-Wordformat.
 YoumayalsocomposeyourassignmentinOpenOfficeformat.
 Useblackandbluefontcolorsonly.
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
 Itissubmittedaftertheduedate.
 Thefileyouuploadeddoesnotopenoriscorrupt.
 It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
 Itischeatedorcopiedfromotherstudents,internet,books,journalsetc. Note related to load shedding: Please be proactive
Dear students!

As you know that Pre‐ Mid‐Term semester activities have started and load shedding problem is also prevailing in our country. Keeping in view the fact, you all are advised to post your activities as early as possible without waiting for the due date. For your convenience; activity schedule has already been uploaded on VULMS for the current semester, therefore no excuse will be entertained after due date of assignments, quizzes or GDBs.

Total Marks 5
Starting Date Wednesday, July 31, 2019
Closing Date Tuesday, August 06, 2019
Status Open
Question Title GDB
Question Description
The case:

Pakistan International Airlines (PIA) has started pre-Hajj operation from 4th July, 2019, and it will continue till fifth of the next month as per the decision of Minister for Aviation Ghulam Sarwar Khan in Islamabad. It was told by minister that PIA has planned a total of 294 flights for intending pilgrims. As per this plan suppose PIA is offering 10 flights per day from Lahore to Saudi Arabia. Due to the heavy rush of Hujaj Karam manager of PIA, with the approval of Minister for Aviation, has decided to add 11th flight per day in order to avoid any unavoidable circumstances. If minister of Aviation permits and it becomes possible then it would cost Rs.180, 000 per flight, or Rs.2000 per available seat and this decision is also helpful to increase revenue of the PIA.

Requirement:
Being a student of economics identify which type of cost is applied for this decision to add the hajj flight per day. Will that identified concept of cost be relevant for decision making purposes or not? Discuss.