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 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.

It is in terms of specific quantities.
A forecast is made for a specific period of time which would be sufficient to take a decision and
put it into action.
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 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 TFC TVC TC AFC AVC AC MC

Units in Rs in Rs. in Rs. in Rs. in Rs. In Rs. in Rs.

0 360 - 360 - - - -
1 360 180 540 360 180 540 180
2 360 240 600 180 120 300 60
3 360 270 630 120 90 210 30
4 360 315 675 90 78.75 168.75 45
5 360 420 780 72 84 156 105
6 360 630 990 60 105 165 210

Kindly call on 9359832368,8006853137 if you are interested in purchasing smu assignment for sem-1

Prepared by eminent faculties

Rs. 500 for all

Pls. call soon