5. Critically assess the methods used to generate empirical estimates of both short- and long-run cost functions. Do the empirical difficulties encountered rob the resulting estimates of any general operational utility? 6. 'About half of all advertising expenditure is wasted. The problem lies in knowing which half.' Discuss this statement and assess the usefulness of managerial models of advertising allocation decisions. 7. Analyse the effects of an increase in interest rates on the investment activity of a profit maximising firm. Does it matter if inflation increases in proportion to the increase in interest rates? 8. (a) Show that an increase in the unit value of stock will lead to a less than proportionate fall in the optimum amount of stock held. What assumptions underlie your answer? (b) A firm faces a uniform annual demand of 100 000 units. The purchase cost of stock is 10 per unit, whilst the cost of ordering stock is 20, and the cost of holding stock is 14% of the average stock value. Find the Economic Order Quantity and the Minimum Acquisition Cost. How are your answers affected by: (i) the fact it takes two weeks between placing an order and stock arriving; (ii) the offer of a 1% discount off the purchase cost if stock is ordered in lorry loads of 17 000 units. 9. 'The market allocates resources to the firms that best meet the needs of consumers.' Discuss. 10. 'The force of competition, the desires of managers and the needs of shareholders combine to ensure that firms maximise profit.' Discuss.

2.Read the executive summary of the Alliance of BC Students White Paper on Student Housing. What is the ABCS proposing that could help decrease price in the market? How would this affect supply and/or demand?

3.Explain why a housing market at equilibrium could still have a vacancy rate of 4%.