1.Explain the determination of the optimal price and output combination in a situation of monopolistic competition. Use the resulting equilibrium to illustrate the statement that 'production inefficiency is a necessary price to pay for product variety'. Comment on this statement.

2. Assess the contribution of business games to the study of decisionmaking processes, illustrating your answer by reference to one business game with which you are familiar.

3. 'Given that the future is unknown, the best we can do is to estimate the likelihood of future events and then use expected profit as the decision criterion.' Discuss.

4.A firm has an annual demand of S units for a good whose purchase cost is c per unit. Each order costs a to place, and the cost of holding stock is b% of the average value of stock per annum. Determine the optimal order quantity.

5.A local firm uses 2000 units of a particular component each year. The component has a purchase price of 4/unit, while the cost of holding stock is estimated at 20% of the average stock value. If the cost of placing each order is 12.50, find the optimal number of orders placed each year.

6.Suppose the component supplier offers a discount of 2% on the purchase price if orders are placed in units of 1000. Is the discount worth accepting?

7.Define marginal utility, total utility, and diminishing utility with diagrams.

8.Identify the differences between private, common, and public goods.

9.Describe the relationship between productivity and the different costs of production. 10.Describe the various market structures, their characteristics, and the effects of each structure in relationship to the market.

11.Identify the differences between economic and accounting profit.

12.Explain discrimination in the labor market.

13.Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers.

14.Explain what is meant by the discounting approach to investment appraisal, and contrast this to more ad hoc methods such as payback. Show that there may be circumstances where information is inadequate for discounting, and where other methods more adequately reflect the firm's objectives. Finally discuss the empirical evidence (which seems to point to the use of other methods in smaller companies, but that discounting is increasingly used by large corporations).q