Managerial Economics

QUESTION THREE: (a) Explain how managers can influence the profit levels of their firms (5mks) (b) Suppose the fixed costs for an imaginary firm is Shs10,000, price for its product is Shs 20 and the average variable costs are Shs 15 and that it has set of profit target of Shs 20,000 i. Compute how much this firm needs to produce in order to generate the anticipated profits (5marks) ii. Compute the break-even rate of output of this firm ( 3 marks) (c) Critically examine the uses of the break-even techniques in decision-making by the management of a firm (7 marks)