Managerial Economics Question Paper
Managerial Economics
Course:Master Of Business Administration
Institution: Kenyatta University question papers
Exam Year:2010
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING EXAMINATION FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
BBA 501: MANAGERIAL ECONOMICS
DATE: Thursday 18th February 2010 TIME: 2.00 p.m – 5.00 p.m
INSTRUCTIONS: Attempt ALL the questions
1.
a)
Hale and Hearty limited (HH) is a small distributor of B and Q food stoves in the highly competence health care products industry. The market determined price of a 100-tablet Vial of HH most successful products, papaya extract is 10.HH′stotalcost(TC)functionisgivenas.TC=100+2Q+0.01Q2.a)Whatisthefirmsprotectmaximizinglevelofoutput?[3marks]b)AtP= 10 what is HH’s break- even output level. [ 3 marks]
c)
What is HH’s shutdown price and output level? [ 3 marks]
b)
Explain the following pricing policies that can be used by a company.
i)
Cost plus
[ 2 marks]
ii)
Marginal costing
[ 2 marks]
iii)
Average costing
[ 2 marks]
2.
Argon Airlines and Boron Airways are two equal- sized commercial air carries that complete for passengers along the Lucerne route. Both firms are considering offering discount air fares during the traditionally slow month of February. The pay- off matrix for this game given below.
Boron
Discount
No discount
Argon
Discount
(2, 3)
( 7, 5, 1)
Page 1 of 3
No discount
( 1, 5, 6)
(3,2)
Show the game by identifying the Nash equilibrium. [5 marks]
b)
Define the following terms found in game theory.
i)
Nash Equilibrium
[ 2 marks]
ii)
Strategy
[2 marks]
iii)
Player
[2 marks]
iv)
Dominant strategy
[2 marks
v)
Saddle point.
[2 marks]
3.
a)
What is the difference between the standard deviation and coefficient of variation as a measure of risk? When would be appropriate to use each one? [5 marks]
b)
The management of Rubican company is trying to decide whether to advertiser its product on television or in magazines. The marketing department of the company has estimated the probabilities of alternative sales revenues using each of the two media which are summarized below
Television
Magazines
Sales Probabination
Sales Probabination
5000 0.2
6000 0.15
8000 0.3
8000 0.35
11000 0.3
10,000 0.35
14 000 0.2
12,000 0.15
Requirement
a)
Expected revenues for the company from each media. [ 3 marks]
b)
Standard deviation for each media [ 3 marks]
c)
Which advertising campaign appears relatively riskier [ 2 marks]
d)
Which advertising campaign should the company select. [ 2 marks]
4.
a)
Explain the factors that determine the market structure within which a firm should operate. [ 3 marks]
b)
Explain the determination of price and quantity under the following market structure.
i)
Perfectly competitive
[3 marks]
ii)
Monopoly
[3 marks]
iii)
Ongopoly
[3 marks]
iv)
Monopolistic competition
[3 marks]
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