Assessment: The Homework Assignment
Course: MBA-6212, Summer II, 2021
Instructor: Dr. I
ahim Abou-Saad
Available: On July 16, 2021, at 6 AM
Due: On August 4, 2021, at 11:59 PM
Goals:
1. Students fully understand the principles of managerial economics that apply to typical
usiness firms.
2. Students learn how to use the foundation elements of microeconomics in managing the
usiness firm’s operations based on optimal economic behaviors.
3. Students apply their learned theoretical concepts in managerial economics in a class
assignment that simulates alternative potentials in the business reality.
Student Learning Objective (SLO): Design an economic framework for an efficient
advertising campaign for business firms with market power.
Assessment: The Homework Assignment.
Students are asked to use their learning in the course regarding economically efficient
advertising campaigns to work on this homework assignment.
The students need to evaluate the information provided in the homework assignment to design
six different diagrams that represent a full understanding of the content taught.
Framework:
Bloom’s Revised Taxonomy: Analyze; Evaluate; Create.
Prompt Question(s) and Instructions:
Watsonia is an economically rational firm that is preparing an advertising campaign to promote
its product, “Zeta.” Watsonia is a monopolistically competitive firm with a relatively high power
over the market price.
The following ten graphs represent two group of graphs; Figure A (i.e., panels 1, 2, 3, 4, and 5)
and Figure B (i.e., panels 1, 2, 3, 4, and 5).
First: Combine one panel from “Figure A” and one panel from “Figure B”, at a time, to create
six “diagrams” that represent the following long-run examples (i.e., apply the graph-overlapping
technique discussed in class by printing each panel from each figure on a separate transparent
paper).
Second: By overlapping of one panel from Figure A over one panel from Figure B, identify six
different “diagrams,” where each diagram has to represent one of the following cases (i.e., do not
change the names of the diagrams):
Diagram 1: The most economically-efficient advertising campaign.
Diagram 2: The least economically-efficient advertising campaign.
Diagram 3: An advertising campaign that is most efficient in promoting the product Zeta, but at
the highest average cost.
Diagram 4: An advertising campaign that is most cost-efficient but the least efficient in
promoting product Zeta.
Diagram 5: An advertising campaign is successful in shifting the demand curve of the
consumers upward at the least average cost possible, but was not successful in
convincing the consumers that product Zeta has fewer good substitutes, and
accordingly the campaign failed to convince the consumers that product Zeta is
more important to them in the long run.
Diagram 6: An advertising campaign that is most efficient in promoting the product Zeta, but
did not change the most productive efficient level of output in the long run (i.e., the
level of output that maximized economies of scale).
Third: Scan each created diagram and submit all four diagrams in one PDF file. Before
scanning, make sure to show (mark and shade) the equili
ium status in the long
un, AFTER the advertising campaign is executed, represented by all of the
following:
• The equili
ium market price (mark it as “P2” on the vertical axis).
• The Watsonia’s equili
ium level of the long-run average cost (mark it as “LAC2” on the
vertical axis).
• The Watsonia’s long-run equili
ium output (mark it as “Q*” on the horizontal axis).
• The long-run profit area (shade the profit area). Type on the shaded area either “Positive
Profits” or “Negative Profits” depending on whether there are positive or negative profits,
espectively. If there is “Zero Profits,” do not type anything or shade anything. In other
words, no shadings means that profits equal zero after the advertising campaign is
executed. Important: Only shade the profit areas AFTER the advertising campaign is
executed. Do not show (shade) the profit areas before the advertising campaign is
executed.
Finally: Do not provide any explanation on any of the diagrams for why you have
chosen the specific panels from Figure A and Figure B to create your diagrams. Only marking
and shading on the scanned diagrams are required. Providing such explanation(s) will deduct
significant points at the instructor’s discretion. See the sample on the last page, below, to see an
example of how a “diagram” should look like.
Again, do not shade any area other than the long-run profit area, “at the equili
ium level
of output,” and “after” the advertising campaign is executed.
Important: When printing and scanning, Black and white diagrams and color diagrams are both
allowed, and non is prefe
ed to the other.
Important: If you feel there is an e
or in the graphs, do not indicate such belief on this
homework assignment. Instead, discuss such feeling with the instructor prior or after submitting
this assignment.
Important: The assignment has to be uploaded to Blackboard. No email submission is accepted.
Email submission will result in a zero score for the homework assignment.
Important: You can upload many files, but only the last submitted file will be kept and graded.
Important: Only PDF submission is accepted.
Important: The whole solved homework assignment has to be submitted in one PDF file.
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
Demand Curve-1
MR-1
Figure A – Panel 1
MR-2
Demand Curve-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
Demand Curve-1
MR-1
Figure A – Panel 2
MR-2
Demand Curve-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
Demand Curve-1
MR-1
Figure A – Panel 3
MR-2
Demand Curve-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
Demand Curve-1
MR-1
Figure A – Panel 4
MR-2
Demand Curve-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
Demand Curve-1
MR-1
Figure A – Panel 5
MR-2
Demand Curve-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 1
LAC-2
LMC-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 2
LAC-2LMC-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 3
LAC-2
LMC-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 4
LAC-2
LMC-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 5
LAC-2LMC-2
Grading Ru
ics (out of 100% for the homework assignment):
Category Basic Work Figure Analysis Findings
Poo
Unacceptable (Up to 5%) The
student did not
overlap diagrams
(Up to 5%) The
student did not
overlap diagrams
(Up to 5%) The
student did not
overlap diagrams
Below Expectations (Up to 10%) The
student overlapped
the diagrams but
more than two
diagrams were
overlapped
inco
ectly.
(Up to 20%) The
overlapped diagrams
showed that the
student analyzed the
demand side or the
supply side separately
within each diagram.
(Up to 30%) The
overlapped diagrams
showed that the
student did not
conclude the co
ect
optimal solution in at
least one created
diagram.
Meets Expectations (Up to 20%) The
student overlapped
the diagrams but no
more than two
diagrams were
overlapped
inco
ectly.
(Up to 25%) The
overlapped diagrams
showed that the
student analyzed the
demand side or the
supply side
simultaneously
within each diagram
ut had difficulties
showing the shaded
profit areas as a
factor in
distinguishing
etween some of the
created diagrams.
(Up to 35%) The
student showed the
co
ect optimal
solution in each
created diagram
separately but was
not able to find the
final co
ect answers
ased on comparing
each two created
diagrams.
Above Expectations (Up to 30%) The
student co
ectly
overlapped the
diagrams
(30%) The
overlapped diagrams
showed that the
student analyzed the
demand side or the
supply side
simultaneously
within each diagram
and was able to show
the shaded profit
areas that
distinguished
etween some of the
created diagrams.
(40%) The student
showed the co
ect
optimal solution in
each created diagram
separately and was
able to find the final
co
ect answers by
comparing each two
created diagrams.
A sample for how to create a “diagram” using the panels in “Figure A and Figure B.”
Important: The two panels in this diagram (i.e., below) are not nessisairly
identical to any of the panels that are required in this homework assignment.
Sample Diagram
Output (Q)
MR, AR, P, LAC, LMC
Demand Curve-1
LAC-1
LMC-1
MR-1
LAC-2LMC-2
MR-2
LAC2
P2
Demand Curve-2
E1
E2
Q*1 Q*2
P1 = LAC1
Figure B – Sample PanelFigure A – Sample Panel
Managerial Economics
Instructor: Dr. I
ahim Abou-Saad
Positive Profits