Economics for Manager

Running Head: ECONOMICS FOR MANAGER
Economics for Manager
Name of Student:
Name of University:
Author’s note:

ECONOMICS FOR MANAGER1
Table of Contents
Answer: 1.........................................................................................................................................2
Answer: 2.........................................................................................................................................3
Answer: 3.........................................................................................................................................5
Answer: 4.........................................................................................................................................6
Answer: 5.........................................................................................................................................7
Answer: 6.........................................................................................................................................9
Answer: 7.......................................................................................................................................10
Reference List................................................................................................................................12

ECONOMICS FOR MANAGER2
Answer: 1
The production technology of the manufacturing firm is represented by a learning curve.
Every time the firm increase the production by one unit, their costs decrease by 10%. The first
unit costs them $284 to produce. Given below is a cost table representing the cost up to 15 units.
The marginal cost is also estimated.
Units Cost
Marginal
cost
1 284 0
2 255.6 28.4
3
230.0
4 25.56
4
207.0
4 23
5
186.3
3 20.71
6 167.7 18.63
7
150.9
3 16.77
8
135.8
4 15.09
9
122.2
6 13.58
10
110.0
3 12.23
11 99.03 11
12 89.13 9.9
13 80.22 8.91
14 72.2 8.02
15 64.98 7.22
Table1: Cost incurred by the firm
Total cost=Sum of cost of 15 units of the commodity produced = $ (284 + 255.6 + 230.04 +
207.04 + 186.33 + 167.7 + 150.93 + 135.84 + 122.26 + 110.03 + 99.03 + 89.13 + 80.22 + 72.2 +
64.98) = $2255.33
Average cost = Total cost/ Total units = $2255.33/15 = $150.36

ECONOMICS FOR MANAGER3
If they receive a proposal to produce and sell 10 units, the break-even price would be $110.03.
The break-even price for 12 units is $89.13.
0 2 4 6 8 10 12 14 16
0
50
100
150
200
250
300
Learning Curve
Units
Cost
Figure1: Learning curve to represent the cost structure of the firm
Source: (As created by author)
The learning curve represents the amount if work done by learning. As the firms produce
more output, they become more experienced and understand the ways to make it such that the
cost of production goes down by 10%. Thus, the learning curve is downward sloping showing a
negative relation, as the amount of goods produced goes up, the production cost decreases
(Zhang et al. 2013).
Answer: 2
Assuming that the market for marker pen is competitive and includes no transaction cost.
Twelve suppliers and buyers are willing to sell pen at some specified prices. Below given is the
table to show the quantity demanded at each price.