M Umair Abbas (21802) BBA E A

Q1 Define the basic concept of liner regression and correlation in
short?
Q2 Managerial economics is about the application of economic theory
and methods to business decision-making?
MANAGERIAL ECOCNOMIC
Managerial economics refers to the application of economic theory and the tools of analysis
of decision science to examine how an organization can achieve its aim or objective most
efficiently
Management decision need to be made in any organization –be it a firm, a not –for profit
organization (such as hospital or a university), or a government agency – when it seek to
achieve some goal or objective subject to some constraint
For example, a firm may seek to maximize profit subject to limitation on the availability of
essential inputs and in the face of legal constraints .A hospital may seek to treat as many
patients as possible at an “adequate” medical standard with its physical resources (physician,
technicians, nurses, equipment, beds) and budget. The goal of state university may be to
provide an adequate to many students as possible ,subject to physical and financial
constraints it faces.similarly,a government agency may seek to provide a particular service
(which cannot be provided as efficiently by business firm ) to as many people as possible at
the lowest possible cost .in all these cases, the organization face management decision
problem as it seeks to achieve its goal or objective ,subject to the constraints it faces .The
goals and constraint may differ from case to case, but the basic decisions –making process is
same.
MANAGERIAL ECOCNOMIC
Economic
Theories
Managerail economic
Application of
economic theory and
decision science tools
to solve the
managerial problems
Decision
science
As an approach to decision-making, managerial economics is related to economic theory,
decision sciences and business functions. These relationships are now discussed.
Economic theory:
The main branch of economic theory with which managerial economics is related is
microeconomics, which deals essentially with how markets work and interactions between
the various components of the economy. In particular, the following aspects of
microeconomic theory are relevant:
1. Theory of the firm
2. Theory of consumer behavior (demand)
3. Production and cost theory (supply)
4. Price theory
5. Market structure and competition theory
Decision science:
The decision sciences provide the tools and techniques of analysis used in managerial
economics. The most important aspects are as follows:
1. Numerical and algebraic analysis
2. Optimization
3. Statistical estimation and forecasting
4. Analysis of risk and uncertainty
5. Discounting and time-value-of-money techniques
Business function:
All firms consist of organizations that are divided structurally into different departments or
units, even if this is not necessarily performed on a formal basis. Typically the units involved
are:
1. Production and operations
2. Marketing
3. Finance and accounting
4. Human resources
In short managerial economics is not study of number of independent topics but the use of
economic theory management science, business function tool to examine how affirm can
archive its objective most efficiently within the business environment in which it operates.
Q3). Solve the following if the sales is 10 million what would be the
expected profit?
X Y XY x2
7 0.15 1.05 49
2 0.10 0.2 4
6 0.13 0.78 36
4 0.15 0.6 16
14 0.25 3.5 196
15 0.27 4.05 225
16 0.24 3.84 256
12 0.20 2.4 144
14 0.27 3.78 196
20 0.44 8.8 400
15 0.34 5.1 225
7 0.17 1.19 49
132 2.71 35.29 1796
a= y−¿ ¿ - bx
−¿¿
−¿
Y
b = ∑ XY −n X −¿ 2
∑ X −n X −2
¿
¿
132
x−¿¿ = 12
= 11
2.71
y−¿ ¿ = 12
= 0.225
35.29−12∗11∗0.225 5.59
b= = = 0.016
1796−12∗112 344
a = 0.225 – 0.016 * 11 = 0.049
IS sale is 10 million
Estimated profit = 0.225 -0.016(10) = 0.209 or 209000 ANS
Q4. Calculate the Economic Order Quantity from the following

information. Also state the number of orders to be placed in a year?
A=Consumption of materials per annum: 17,000 kg
O= Order placing cost per order : 50
Cost per kg. Of raw materials : 6 * 0.16 = 0.96
C= Storage costs : 16% on average inventory

2∗A∗O
EOQ = √
C
2∗17000∗50
EOQ =
√ 0.96
1700000
EOQ =
√ 0.96
EOQ = √ 1770833.333
EOQ = 1330.72 ANS
Q5) Define the productivity for these cases?

Workers = 4
Yards of carpet = 720 square yards
Hours = eight
YARDS OF CARPET
PRODUCTIVITY=
TOTAL LABOUR HOURS
Total labour cost = workers * hours
Total labour cost = 4 * 8
Total labour cost = 32
YARDS OF CARPET
PRODUCTIVITY=
TOTAL LABOUR HOURS
720
PRODUCTIVITY=
32
PRODUCTIVITY = 22.5 ANS

M Umair Abbas (21802) BBA E A

Uploaded by

Copyright:

Available Formats

M Umair Abbas (21802) BBA E A

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

M Umair Abbas (21802) BBA E A

Uploaded by

Copyright:

Available Formats

Q1 Define the basic concept of liner regression and correlation in

Estimated profit = 0.225 -0.016(10) = 0.209 or 209000 ANS

Q4. Calculate the Economic Order Quantity from the following

O= Order placing cost per order : 50

Cost per kg. Of raw materials : 6 * 0.16 = 0.96

C= Storage costs : 16% on average inventory

EOQ = 1330.72 ANS

Q5) Define the productivity for these cases?

Total labour cost = workers * hours

Total labour cost = 4 * 8

Total labour cost = 32

PRODUCTIVITY = 22.5 ANS

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.