saad karimi (assignment 2)

8/15/2019 Saad Karimi (Assignment 2)

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MANAGERIAL ECONOMICSASSIGNMENT # 2

CHAPTER 3 & 5

PREPARED BY

SAAD KARIMI (4123541)

DATED: 28TH JAN 21!


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CHAPTER 3"$%' 4: You are interviewing three people for one sales job. On the basis of your experience and insight, you believe

Jane can sell 600 units a day, Joe can sell 40 units a day, and Joan can sell 400 units a day. !he daily salary each person

is as"ing is as follows# Jane, $%00& Joe, $'0& and Joan, $'00. (ow would you ran" the three applicants)

A%*$+:

* would choose Jane because he is expected to sell +ore units daily

on least per unit salary.

"$%' 11: decision +a"er wishes to +axi+i-e the total benefit associated with three activities, X, Y, and Z. !he price

per unit of activities X, Y, and Z is $', $%, and $, respectively. !he following table gives the ratio of the +arginal benefit to

the price of the activities for various levels of each activity#

a. *f the decision +a"er chooses to use one unit of X, one unit of Y, and one unit of Z, the total benefit that results is $//// .

b. or the fourth unit of activity Y, each dollar spent increases total benefit by $ //////. !he fourth unit of activity Y

increases total benefit by $/////// .c. 1uppose the decision +a"er can spend a total of only $'2 on the three activities. 3hat is the opti+al level of X, Y, and Z?

3hy is this co+bination opti+al) 3hy is the co+bination % X, %Y, and 4 Z not opti+al)

d. ow suppose the decision +a"er has $ to spend on the three activities. 3hat is the opti+al level of X, Y, and Z? *f the

decision +a"er has $ to spend, what is the opti+al co+bination) 5xplain.

A%*$+:,) '0%%'4 7 $46.-) or the fourth unit of activity Y, each dollar spent increases total benefit by $'0, and total benefit by $'0..) % units of 8, 4 units of Y, and units of 9 will be the opti+al level because the co++ulative expenditure will be

e:ual to $'2. 3here as %8, %Y ; 49 will give total expenditure of $'2 but +arginal benefit will not be +axi+u+.

/) units of 8, units of Y and 6 units of 9 will be the opti+al level as +arginal benefit will be +axi+u+ and totalexpenditure will be $.< units of 8, units of Y and 6 units of 9 will be the opti+al level as +arginal benefit will be +axi+u+ and totalexpenditure will be $.

"$%' 12: 1uppose a fir+ is considering two different activities, 8 and Y, which yield the total benefits presented in theschedule below. !he price of 8 is $% per unit, and the price of Y is $'0 per unit.


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a. !he fir+ places a budget constraint of $%6 on expenditures on activities Xand Y. 3hat are the levels of X and Y that +axi+i-e total benefit subject tothe budget constraint)b. 3hat is the total benefit associated with the opti+al levels of X and Y inpart a?c. ow let the budget constraint increase to $2. 3hat are the opti+al levelsof X and Y now) 3hat is the total benefit when the budget constraint is $2)

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,) units of 8 and % units of Y at a budgetconstraint of $%6.

-) units of 8 7 avarian ?rystal 3or"s designs and produces lead crystal wine decanters for export to international +ar"ets.!he production +anager of >avarian ?rystal 3or"s esti+ates total and +arginal production costs to beTC 7 '0,000 40Q 0.00%Q% and MC 7 40 0.00Q where costs are +easured in @.1. dollars and Q is the nu+ber o wine decanters produced annually. >ecause >avarian ?rystal 3or"s is only one of +any crystal producers in the world+ar"et, it can sell as +any of the decanters as it wishes for $


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depart+ent reco++ends hiring :uality inspectors to sa+ple for defective toys. *n this way +any :uality proble+s can be caught anprevented before shipping. fter visiting other co+panies, a +anage+ent tea+ derives the following schedule showing thapproxi+ate nu+ber of defective toys that would be produced for several levels of inspection#

!he daily wage of inspectors is $


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a. Miven that >ill can consu+e only '6< gra+s o

carbohydrates daily, how +any cups of each food wi

he consu+e daily) 1how your wor".

b. 1uppose >illNs doctor tells hi+ to further reduce hi

carbohydrate inta"e to '%6 gra+s per day. 3ha

co+bination will he consu+e)

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,) B%CB

saad karimi (assignment 2)

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