Eco

MBA105 - MANAGERIAL ECONOMICS

Q1.Explain the meaning and Features of demand forecasting? Meaning of Demand forecasting Meaning of Demand forecasting seeks to investigate and measure the forces that determine sales for existing and new products. Generally companies plan their business - production production or sales in anticipation of future demand. Hence, forecasting future demand becomes important. The art of successful business lies in avoiding or minimizing the risks involved as far as possible and facing the uncertainties in a most befitting manner. Features of demand forecasting 

It is an informed and well thought out guesswork.

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It is in terms of specific quantities.

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A forecast is made for a specific period of time which would be sufficient to take a decision and put it into action.

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It is based on historical information and the past data.

Q2.Explain the cost output relationship and nature and behavior of cost curve in the short run with hypothetical cost schedule? The relationship between the cost and output is different at two different periods of time i.e. short-run and long run. Generally speaking, cost of production will be relatively higher in the short-run when compared to the long run. This is because a producer will get enough time to make all kinds of adjustments in the productive process in the long run than in the short run. When cost and output relationship is represented with the help of diagrams, we get short run and long run cost curves of the firm. Now we shall make a detailed study of cost output relations both in the short-run as well as in the long run. Cost-output relationship and nature and behaviour behaviour of cost curves in the short run In order to study the relationship between the level of output and corresponding cost of production, we have to prepare the cost schedule of the firm. A cost-schedule is a statement of variations in costs resulting from variations in the levels of output. It shows the response of costs to changes in output. Hypothetical Cost Schedule Output in Units

TFC in Rs

TVC in Rs.

TC in Rs.

AFC in Rs.

AVC in Rs.

AC In Rs.

MC in Rs.

0

360

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360

-

-

-

-

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1 2 3 4 5 6

360 360 360 360 360 360

180 240 270 315 3 15 420 630

540 600 630 675 6 75 780 990

360 180 120 90 72 60

180 120 90 78.75 84 105

540 300 210 168.75 156 165

180 60 30 45 105 210

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