Section A: Answer All Questions

Q1)The forecast of a product for the first week of March was 600 units, whereas the actual demand turned out to be 550 units.

a)Find the forecast for the second week of March by assuming the smoothing constant (a) as 0.2

b)Find the forecast for the third week of March if the actual demand of the second week is 620 unitsPoints:2

Q2) Suppose Company A owns the patent to "X", which is the only approved drug for the treatment of sepsis. Sepsis is a severe illness caused by a bacterial infection which possibly leads to the failure of multiple organs. Company B manufactures "Y", which is not covered by patent, and is one of several drugs that relieve the symptoms of the common cold.Points:3

a)Who has relatively more market power: Company A over treatments for sepsis or Company B over drugs for relieving the common cold? Please explain your answer.

b)How is the difference between price and marginal revenue related to the price elasticity of demand?

Q3) Sam's pasta is identical to the pasta made by dozens of other firms and there is free entry in the pasta. Buyers and sellers are well informed about prices.Points: 5

a.In what type of market does Sam's operate?

b.What determines the price of pasta?

c.What determines Sam's marginal revenue of pasta?

d.If pasta sell for $5 a packet and Sam offers his pasta for sale at $5.50 a packet, how many packets does he sell?

e.If pasta sell for $5 a packet and Sam offers his pasta for sale at $4.50 a packet, how many packets does he sell?

f.What is the elasticity of demand for Sam's pasta and how does it differ from the elasticity of the market demand for pasta?

Q4) Fluidyne Corporation manufacturesandsellswaterfilters.Theeconomic forecasting unit of thecompany has supplied the following demand equation:Points: 5

QB=2000 -5PB+2.5PC+0.82Y+ 0.6AB

(1200)(1.5)(1.2)(0.5)(0.2)

Where,

QB=quantitysold

PB=priceperunit

PC=averageunitpriceofcompetitor'sproduct

Y=incomeperhousehold

AB=advertising expenditure

R2= 0.86

S.E.E=5

Standard error of coefficients in parentheses (1200) (1.5) (1.2,) (0.5) , ( 0.2)

Given, PB=$50,PC=$45,AB=$12,500Y=$2,000

a)Does each independent variable have a significant effect on the sales of Fluidyne water filters?

b)Interpret the coefficient of variables that are significant?

c)Interpret the coefficient of determination(R²)

d)Determine the monthly quantity demanded sold (QB) for water filter?

e)Is the quantity demanded for water filter (QB) sensitive to its own price?

f)Is water filter a luxury or necessity?

Q5)'

A small machine shop manufactures drill bits used in the petroleum industry. The shop manager estimates that the total daily cost (in dollars) of producing x bits is:(Points: 5)

C(x) = 1000+25x - 0.1x²

(a) Find Average cost (AC) and Marginal cost (MC) when Q=10.

(b)Further, if the selling price of a unit is2x²+ 9, find the Average Revenue (AR) and Marginal Revenue (MR).

(c) Calculate Average Profit (AP) and Marginal Profit (MR).