MANAV RACHNA COLLEGE OF ENGINEERING, FARIDABAD

Department of Business Administration

Semester I
Managerial Economics (2102)
Assignment II
There are five questions. Each question carries five marks.

Q1. Under what conditions should a firm continue to produce in the short run if it incurs
losses at best level of output? Are normal returns on investment included as part of
cost or as part of profit in managerial economics? Explain.
Q2. Can a monopolist incur loses in short run? Why? Can a monopolist earning short
run profit increase those profit in long run? Why?
Q3. Identify the distinguishing characteristics of oligopoly in other forms of market
organizations and discuss its significance. In which sector of Indian economy
oligopoly is most prevalent? Why?
Q4. Why do most firms produce more than one product? Why would a firm produce a
product on which it makes zero profit?
Q5. Explain Baumol sales maximization theory with and without advertising.