At times, managerial economics is referred to business economics as it is a branch of economics that uses micro economic analysis to come up with business decisions. Some of the areas that call for managerial decisions include funds assessment, business area selection, and product choice, optimum out determination, price determination, and sales promotion among others. It is worth nothing that majority of business decisions employ managerial economics way of decision making, however, it is commonly applied in analysis of risks, products, prices, and capital budgeting.
We would demonstrate all the three methods. Allocate the minimum of remaining balance of supply in last column and demand in last row. Let us select S1D5 route. One can also select other route S2D5 or S3D5 in case of tie.
For S1D5, available supply is and available demand is units. The lower is units. Hence, allocate units-through this route i. With this allocation, entire demand of route S1D5 is consumed but supply of corresponding source, S1, is still or units left.
This is marked in last column of supply. The entire demand of destination, D5, is consumed. We get the following matrix Fig. Now, we leave the consumed routes i. Next, least cost route is S1D1, with 13 per unit of shipping cost. For this route, the demand is units and remaining supply is units.
We allocate minimum of the two, i. So, now leave the destination D1 and we get the following matrix. With units allocation in route S1D5 Assignment for destination D1 and D5 consumed Now, we work on remaining matrix, which excludes first column D1 and last column D5.
Next assignment is due in the least cost route, which is route S2D4. For this route, we can allocate units which is lesser of the corresponding demand units and units.
By this allocation in route S2D4, the demand of destination D4 is consumed.
So, this column is now crossed out. Next assignment is due in the least cost route of the remaining routes. Note that we have two potential routes: Both have 16 units of transportation cost. In case of any tie such as thiswe select any of the routes.
Let us select route, S1D2, and allocate 50 units minimum of demand of and supply of remaining 50 units.
With this, all supply of source S1 is consumed. Therefore, cross out row of S1. We get the following matrix: With this source, S2 is consumed.
Next allocation of units is done in route S3D2 and units in route S3D3. Final initial assignment is as follows: Initial assignment by least cost method Step 3: Count the number of filled or allocated routes.1. What is Managerial Economics?
What is its relevance to Engineers/Managers? Ans: Study of economic theories, logic and methodology for solving the practical problems of business. It is used to analyze business problems for rational business decisions.
It is also called as Business Economics or 5/5(12). 1 Homework 1 Managerial Economics. caninariojana.com each of the following instances, discuss whether horizontal or vertical boundaries have been changed, and whether they were extended or shrunk.
Scarcity is the root cause of all economic problems therefore it is central to all economic decisions. Its importance in managerial decision making lies in taking decisions regarding allocation of .
1—what are the four conditions required for a market to be competitive? 2—if the demand is P = – 0. 5Q & supply is P = 15 + 2Q, what is the equilibrium price and quantity in this market? Calculate the elasticity of demand at a price of 90 (this is not the price in #1).
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View Homework Help - Managerial Economics – Homework caninariojana.com from ECON at Rutgers University, Camden. Managerial Economics Homework 1 1.