ECO404 - 2nd GDB - fall 2012

[MSBA_124]

A. If Nestle has a target to achieve 11.6% profit for the year 2014, how they can get insight from Managerial Economics in order to fulfill its target?

Here we have targeted profit of 11.6% for the year 2014. Profit a dependent variable of many independent variables. Not only a single factor is affecting to be exceed or decrease the profit of the firm. Considering managerial economics we will use multiple regressions because of having many independent variables. This will give us information about the strength of factors including market demand but we will also use market indicators. They will give us more clear vision about near future of market.

B. Keeping in view above scenario, discuss with logical reasoning which concept of Managerial Economics tend to increase the quality production of Nestle by promoting such a bumper increase in sales and profit.

In Managerial Economics the concept which is tend to increase the quality production of nestle is the concept of learning curve that we gain from continuous learning. As, learning curve effect states that more times a task is performed less the time will be required on each subsequent. As firms gain experience in the production of commodity or service, their average cost of production usually declines. So, learning curve effect is tend to increase the production quality of Nestle.