Managerial Econs

ECO201

Examination – January Semester 2010

MANAGERIAL ECONOMICS

Wednesday, 19 May 2010 10:00 am – 12:00 pm

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Time allowed: 2 hours

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INSTRUCTIONS TO STUDENTS: 1. This examination contains FOUR (4) questions and comprises SIX (6) printed pages (including cover page). 2. You must answer ALL the questions. 3. All answers must be written in the answer book.

At the end of the examination Make sure that you have written your examination number on each answer book used. Failure to do so will mean that your work cannot be identified. Put your answer books together with your signed desk record on top. Fix them all together with the paper fastener provided.

THE UNIVERSITY RESERVES THE RIGHT NOT TO MARK YOUR SCRIPT IF YOU FAIL TO FOLLOW THESE INSTRUCTIONS.

ECO201 Copyright © 2010 SIM University Examination – January Semester 2010

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You must answer ALL the questions. (Total 100 marks) Question 1 (a) Determine the effect on equilibrium price and quantity if the following changes occur in a particular market. You have to mention what the impact of the changes on demand and/or supply is. (i) Consumers’ income decreases and the good is inferior. (3 marks) (ii) The price of a substitute good (in consumption) increases. (3 marks) (iii) The price of a substitute good in production decreases. (3 marks) (iv) The price of a complement good (in consumption) increases. (3 marks) (v) The price of inputs used to produce the good increases. (3 marks)

(b)

A telemarketer spends 9 hours a week on the telephone soliciting new clients. From past experience, the telemarketer estimates that each hour spent calling students, blue-collar workers, and professionals will produce the following number of additional sales:

Number of Additional Sales Hours Calling 1 2 3 4 5 6 Students 10 8 6 4 1 0...