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Use the data in the following table to answer the questions at the end of this Part 1.
Market segment Sales (‘000 units) Advertising
expenditure
(RM’000) Selling Price
(RM per unit) Disposable
Income
(RM’000)
1 160 150 15.00 19.0
2 220 160 13.50 17.5
3 140 50 16.50 14.0
4 190 190 14.50 21.0
5 130 90 17.00 15.5
6 160 60 16.00 14.5
7 200 140 13.00 21.5
8 150 110 18.00 18.0
9 210 200 12.00 18.5
10 190 100 15.50 20.0
a) Add advertising expenditure as another independent variable and regress sales on selling price, disposable income and advertising expenditure.
I. What is the estimated regression equation? II. How “good” is the estimated model?
III. Discuss the implication of the results of the estimated regression equation.
Market segment Sales (‘000 units) Advertising
expenditure
(RM’000) Selling Price
(RM per unit) Disposable
Income
(RM’000)
1 160 150 15.00 19.0
2 220 160 13.50 17.5
3 140 50 16.50 14.0
4 190 190 14.50 21.0
5 130 90 17.00 15.5
6 160 60 16.00 14.5
7 200 140 13.00 21.5
8 150 110 18.00 18.0
9 210 200 12.00 18.5
10 190 100 15.50 20.0
a) Add advertising expenditure as another independent variable and regress sales on selling price, disposable income and advertising expenditure.
I. What is the estimated regression equation? II. How “good” is the estimated model?
III. Discuss the implication of the results of the estimated regression equation.
Use the data in the following table to answer the questions at the end of this Part 1.
Market segment Sales (‘000 units) Advertising
expenditure
(RM’000)
Selling Price
(RM per unit)
Disposable
Income
(RM’000)
1 160 150 15.00 19.0
2 220 160 13.50 17.5
3 140 50 16.50 14.0
4 190 190 14.50 21.0
5 130 90 17.00 15.5
6 160 60 16.00 14.5
7 200 140 13.00 21.5
8 150 110 18.00 18.0
9 210 200 12.00 18.5
10 190 100 15.50 20.0
Add disposable income as an independent variable and regress sales on both selling price and
disposable income.
I. What is the estimated regression equation?
II. Is the co-efficient on selling price in (a) and (b) the same? Why or why not?
III. What is the income elasticity according to the model at a disposable income level of
RM18,500 and at a selling price of RM12.00 per unit?
Market segment Sales (‘000 units) Advertising
expenditure
(RM’000)
Selling Price
(RM per unit)
Disposable
Income
(RM’000)
1 160 150 15.00 19.0
2 220 160 13.50 17.5
3 140 50 16.50 14.0
4 190 190 14.50 21.0
5 130 90 17.00 15.5
6 160 60 16.00 14.5
7 200 140 13.00 21.5
8 150 110 18.00 18.0
9 210 200 12.00 18.5
10 190 100 15.50 20.0
Add disposable income as an independent variable and regress sales on both selling price and
disposable income.
I. What is the estimated regression equation?
II. Is the co-efficient on selling price in (a) and (b) the same? Why or why not?
III. What is the income elasticity according to the model at a disposable income level of
RM18,500 and at a selling price of RM12.00 per unit?
Hamid Oil (HOSB) is a sole proprietor, producing oil palm in a large scale. The land and machinery he
owns has a current market value of RM4 million. HOSB owes a local bank RM3 million. Last year
HOSB sold RM5 million worth of oil palm. Its variable operating cost were RM4.5 million; accounting
BMME5103/USTY/JAN16/A-KK
depreciation was RM40,000, although the actual decline in value of HOSB macinery was RM60,000
last year. Hamid paid himself a salary of RM50,000, which is not considered as part of HOSB variable
operating costs. Interest on the bank loan was RM400,000. If Hamid worked for another oil palm
producer or a local manufacturer, his annual income would be about RM30,000. Hamid can invest
any funds that would be derived, if the farm were sold, to earn 10 percent annually. (Ignore taxes)
a. Compute Hamid’s accounting profits.
b. Compute Hamid’s economics profits.
c. Based on the answers above, what would be the better option for Hamid, financially?
owns has a current market value of RM4 million. HOSB owes a local bank RM3 million. Last year
HOSB sold RM5 million worth of oil palm. Its variable operating cost were RM4.5 million; accounting
BMME5103/USTY/JAN16/A-KK
depreciation was RM40,000, although the actual decline in value of HOSB macinery was RM60,000
last year. Hamid paid himself a salary of RM50,000, which is not considered as part of HOSB variable
operating costs. Interest on the bank loan was RM400,000. If Hamid worked for another oil palm
producer or a local manufacturer, his annual income would be about RM30,000. Hamid can invest
any funds that would be derived, if the farm were sold, to earn 10 percent annually. (Ignore taxes)
a. Compute Hamid’s accounting profits.
b. Compute Hamid’s economics profits.
c. Based on the answers above, what would be the better option for Hamid, financially?
Scarcity and Choice go together . Explain?
Fixed Cost is 15 and variable cost is 2 per unit, find:
a) write the function for Total Cost (TC), Average Cost (AC) and Marginal Cost (MC)
b) determine the value for Q that minimum AC
c) prove that the answer in (b) AC=MC
a) write the function for Total Cost (TC), Average Cost (AC) and Marginal Cost (MC)
b) determine the value for Q that minimum AC
c) prove that the answer in (b) AC=MC
Economics
What is the relationship between these two subject 'Economics' and 'Human resource management' and How are these two subject related to each other?
Economics
The table shows the demand and supply schedules for a good before and after the imposition of a tax.
price quantity demanded quantity supplied before tax quantity supplied after tax
20 340 440 380
19 340 430 340
18 340 410 290
17 340 380 230
16 340 340 160
15 340 290 80
14 340 230 0
What was the amount of the tax revenue raised for the government?
A $1020 B $1360 C $5440 D $6460
price quantity demanded quantity supplied before tax quantity supplied after tax
20 340 440 380
19 340 430 340
18 340 410 290
17 340 380 230
16 340 340 160
15 340 290 80
14 340 230 0
What was the amount of the tax revenue raised for the government?
A $1020 B $1360 C $5440 D $6460
Assume, in an industry where there are no barriers to entry and firms are making an economic loss in the short run.
a) What options are available to firms in the short run to minimise their losses?
b) Using demand and supply analysis together with the cost curves, explain why the actions to minimise loss lead to firms’ making normal profit in the long run? 3 + 3 = 6 Marks
a) What options are available to firms in the short run to minimise their losses?
b) Using demand and supply analysis together with the cost curves, explain why the actions to minimise loss lead to firms’ making normal profit in the long run? 3 + 3 = 6 Marks
Assume the price of a good increase from $6 to $8, leading to a fall in quantity demanded from 50 to 40 units. Calculate the price elasticity of demand for the good at this price range and explain how total revenue will be impacted by the increase in price?
Discuss how the knowledge of price elasticity of demand can assist firms with their pricing strategy
