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Assignment: Managerial Economics Assignment 2: Name: ENTRY NO: 2019SMF6546 Section: A Year

This document contains an economics assignment submitted by Susanta Biswas including the following sections: 1. A comparison of the fixed costs of movie and book production, noting that movies have much higher fixed costs and therefore pose greater financial risk. 2. An analysis of begging as a "fixed cost industry" in Kolkata, arguing that increased donations will lead to more people relocating to beg but not improve their living standards. 3. A table showing the total, fixed, variable, and average costs as well as total revenue and profit at different production quantities. 4. Answers to questions about when losses versus profits may occur for a business and evaluating advice from consultants. 5

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Santu Biswaa
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100 views

Assignment: Managerial Economics Assignment 2: Name: ENTRY NO: 2019SMF6546 Section: A Year

This document contains an economics assignment submitted by Susanta Biswas including the following sections: 1. A comparison of the fixed costs of movie and book production, noting that movies have much higher fixed costs and therefore pose greater financial risk. 2. An analysis of begging as a "fixed cost industry" in Kolkata, arguing that increased donations will lead to more people relocating to beg but not improve their living standards. 3. A table showing the total, fixed, variable, and average costs as well as total revenue and profit at different production quantities. 4. Answers to questions about when losses versus profits may occur for a business and evaluating advice from consultants. 5

Uploaded by

Santu Biswaa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ASSIGNMENT: MANAGERIAL ECONOMICS ASSIGNMENT 2

NAME: Susanta Biswas ENTRY NO: 2019SMF6546


SECTION: A YEAR: 1st

1.
a) The fixed cost of production of a movie is much higher compared to that of a book. Even a low-
budget commercial movie can go as high as Rs. 10 lakhs because of its high fixed cost. On the
contrary, a book can be published for much less because of its comparatively lower fixed cost.
b) The spending plan of moviegoers is mostly constrained and so higher fixed costs of films mean
less movie production firms in the entertainment business. When a publisher pays for a book
that does not sell, the publishing firm loses a huge amount of money. On the contrary, in an event
when a motion picture studio pays for a film and is not able to sell it, the firm can lose countless
amount of money and may even go bankrupt. Accordingly, the danger of making a film is a lot
more prominent than that of making a book.
c) Utilizing the achievement of an already successful book mitigates a portion of the danger of
film production firms are likely to face. So movie producers are significantly more prone to be
satisfied to bet on a successful book and make a movie out of it than to bet on an orginal movie
with no fan base. Accordingly, we can hope to see more investment in books, the lower fixed-
cost industry, which has lower risk of losing out money.

2. Generous donations to beggars can be considered as generating a demand for begging . It tends
to be expected that asking in India is a fixed cost industry. In Kolkata an enormous number of
very penniless people live in towns. In case the gifts offered to bums rise even a smidgen over the
wages that can be earned by cultivating, various individuals from the towns will move to the
urban areas to ask. Subsequently, the supply bend for asking in Kolkata is exceptionally flexible
at the subsistence wage. An expansion popular will expand the quantity of hobos in the
boulevards of the city however will stop to raise their lifestyle as there will be higher swelling
now that even homeless people can pay more for essential wares. Subsequently, this all-inclusive
liberality towards homeless people will just casue townspeople to relocate to Kolkata but then
won't raise the wages of the bums or their method for living.

3.
Total Cost Fixed Cost Variable Cost Average Cost Marginal Cost Total Revenue Profit
Quantity ($) ($) ($) ($) ($) ($) ($)
0 80 80 0 0 0 0 -80
10 120 80 40 12 4 150 30
20 200 80 120 10 8 300 100
30 320 80 240 10.67 12 450 130
40 480 80 400 12 16 600 120
50 680 80 600 13.6 20 750 70

4.
a) True the reason both of them can be correct is they are talking about different things. In the
main case, it costs per unit the value that one can sell the unit for. So one is losing money for
every unit. In the second situation where one makes a higher number of units, the present
deals cost will effectively conceal ones expanded creation costs.
b) The second consultant is offering the correct advice.
5.
a) Accounting Profit = $ 1000000 - $ 900000 = $ 100000
b) (i) - $ 50,000
(ii) 0
(iii) $ 150,000

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