Q. No. 1

I). Differentiate Short-run and Long-run.

II). Given a Production function, Q = f(L, K), Prove that MRTS_L,K = MP_L/MP_K

III). How does price elasticity help "McDonald" to increase its total revenues?

IV). Give a comprehensive definition and graphical presentation of Law of diminishing marginal product.

Q. No. 2

A).Suppose that Sandwich (Brand X) of cafeteria of Barani Institute of Sciences l is facing following demand function:

Q_x = 1.5 - 3.0P_x + 0.8I + 2.0P_y -0.6 P_b+ 1.2A

Where Q_x = Sales of sandwich brand X in College campus in thousands.

P_x = Rs. 2(Price of sandwich brand X in hundreds of rupees per sandwich)

I= Rs. 2.5(Students' Pocket money in hundreds of rupees.

P_y = Rs. 1.8 (Price of the competitive of sandwich such as Samosa (Brand Y) in hundreds ofrupees per samosa.)

P_b = Rs. 0.5(Price of bread used in sandwich, in hundreds of rupees.)

A =Rs.1(Advertising expenditures for sandwich brand X in hundreds of rupees.)

1. Determine what effect a price increase would have on total revenue of cafeteria?

2. Evaluate how sale of sandwich would change during a period of rising pocket money of students?

3.Assess the probable impact if price of competing product samosa is increased?

B). What is meant by decision making process? Write down its different steps.

Q:3 (Please consider png file to solve this Question)

A). Consider the above production function and explain following queries.

i). What is meant by Marginal Product of Labour (L) and Land (A)?

ii). Find if A = 1, Find if L =2.

iii). Why Marginal Product of a factor decline as more units of the variable inputs are used.

B). What is meant by demand estimation? Analyze the methods to estimate the demand equation. List the problems involved in demand estimation through regression analysis.

A). Consider the above production function and explain following queries.

i). What is meant by Marginal Product of Labour (L) and Land (A)?

ii). Find if A = 1, Find if L =2.

iii). Why Marginal Product of a factor decline as more units of the variable inputs are used.

B). What is meant by demand estimation? Analyze the methods to estimate the demand equation. List the problems involved in demand estimation through regression analysis.