Consider the following questions

1. 'Neither empirical evidence nor theoretical logic offers any justification for the persistence of the dominant position of the kinked

demand curve as a model of oligopolistic behaviour.' Discuss this

statement, and consider whether alternative models of oligopoly

represent any advance on the kinked demand model. ?

2. Assess the view that privatisation can have little impact on the

behaviour of previously nationalised industries, since a state monopoly is simply replaced by a private one.

3. 'Attempting to learn how to make decisions is an exercise in futility.

All the most important decisions are made by people with little time

and even less information, acting on instinct.' Discuss.

4. Critically assess the relevance of the 'as if' principle used to justify the

reliance on profit maximisation as the working objective of the

modern business corporation.

340 Managerial Economics

5. (a) Evaluate the operational utility of demand elasticity estimates,

and outline any interpretational difficulties in the use of such

estimates.

(b) The annual demand function for a particular motor car is

estimated as:

D = 16000-10P/3+ Y2/1000

where D =annual demand, P =price in 's and Y =average

disposable income.

(i) Given that the retail price next year will be 12 000, whilst

average disposable income is expected to be 8000, estimate next year's annual demand. If the manufacturer

receives 80% of the retail price for each car sold, estimate

the manufacturer's revenue next year.

(ii) Find the retail price to maximise manufacturer's revenue

next year.

(iii) If the marginal cost per car is estimated to be 6000, find

the price to maximise profit next year.

(iv) In the subsequent year the retail price is expected to rise to

13 000, whilst incomes should increase by 5%. Estimate

demand and manufacturer's revenue for that year, and use

this information to estimate the price and income demand

elasticities.

6. 'There is a simple relationship between advertising and profitability:

the most profitable firms are the ones that advertise most. Therefore

advertising must increase profitability.' Discuss.

7. Critically examine the proposition that as the contemplated future

volume of output increases, the expected unit cost of output declines.

8. Recommend a price and marketing strategy for the established

automobile manufacturer seeking to enter the market for specialist

competition motorcycles. Compare your recommendations to those

for the automobile firm seeking to enter the volume small car market.

The Board of Directors Alfa Company borrowed a sum of money from a plaintiff. The Articles ofhssociation stated that the B.O.D's could bonow money provided they are authorized by a resolution in the general meeting ofthe company. The shareholders claimed thatthe fund were taken w'r'iout any such resolution; Alfa Company was liable for the loans the plaintiff found that the company could borrow funds based on the resolution, they had enough grounds to believe that resolution was passed. 0n the basis of the above; discuss: a. The importance of resolutions in the management ofthe company. b. As per the Commercial Company Law, does the situation support the plaintiff? c. As per the Commercial Company Law, does the situation support shareholders ofthe Aa Company? d. Are the role of Directors supported by such a situation in Oman Company Law? Question 5 a) Your supervisor made a statement that, 'It Is not compulsory to attend the staff meetings as long as you come to work. As a company law student, evaluate the statement to the staff who have stopped attending the staff meetings and the consequences. b) Maame Serwaa has Just been appointed as a director of a limited llability company. She has approached you with confusion as she does not know what Is expected of her. Critically break down the subject on directors to her. c). Simba Co. Ltd. has been operating for the past two years without holding any meetings. As the company law Intern, convince your supervisor on the need to rectify the errors. Question 5 a) Your supervisor made a statement that, 'It Is not compulsory to attend the staff meetings as long as you come to work: As a company law student, evaluate the statement to the staff who have stopped attending the staff meetings and the consequences. b) Maame Serwaa has Just been appointed as a director of a limited llability company. She has approached you with confusion as she does not know what Is expected of her. Critically break down the subject on directors to her. c). Simba Co. Ltd. has been operating for the past two years without holding any meetings. As the company law Intern, convince your supervisor on the need to rectify the errors.Part C uses the following terminology. Aggregate income, Y Disposable income Yd = Y-7, where Tis a lump sum (i.e. fixed) tax Consumption, C determined according to the consumption function C=Cric(Yd), where Cx is autonomous consumption and c is the marginal propensity to consume. Investment, / Government spending, G Questions At equilibrium, what is (1) the value of aggregate income (call this value Yo) and (in) consumption? Provide your working.Question 13 4 pts Which of the following would be an appropriate fiscal policy to deal with a high rate of inflation? Increase taxes Decrease taxes Decrease money supply O Increase government spending Question 14 14 pts