Assessment: The Homework Assignment
Course: MBA-6212, Summer II, 2024
Instructor: Dr. Ibrahim Abou-Saad
Due: August 1, 2024, at 11:59 PM
Goals:
1. Students fully understand the principles of managerial economics that apply to typical business firms.
2. Students learn how to use the foundation elements of microeconomics in managing the business 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 the economically efficient advertising campaigns
to work on this homework assignment.
The students need to evaluate the information provided in the homework assignment to design tow 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 panels represent two groups 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).
The Assignment:
Combine one panel from “Figure A” and one panel from “Figure B”, at a time, to create two “diagrams” that
represent the following long-run examples (i.e., apply the graph-overlapping technique discussed in Lecture 3
by printing each panel from each figure on a separate transparent paper). In other words: By overlapping of
one panel from Figure A over one panel from Figure B, identify two 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.
(REQUIRED SUBMISSION).
Diagram 2: An advertising campaign that helped to promote product Zeta and at the same time be most cost
efficient; however, out of all panels that helped promoting product Zeta, this advertising campaign
was the least efficient in promoting the product.
(REQUIRED SUBMISSION).
Instructions (Mandatory)
➢ Scan each created diagram and submit all four diagrams in one PDF file. Before scanning, make sure to show
(mark and shade) the equilibrium status in the long run, AFTER the advertising campaign is executed,
represented by all of the following:
• The equilibrium market price (mark it as “P2” on the vertical axis).
• The Watsonia’s equilibrium level of the long-run average cost (mark it as “LAC2” on the vertical axis).
• The Watsonia’s long-run equilibrium 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, respectively. 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 (if exists), “at the equilibrium 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
none is preferred to the other.
Important: If you feel there is an error in the graphs, do not indicate such belief on this homework assignment.
Instead, discuss this observation with the instructor before submitting this assignment.
Important: The homework 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 solved homework assignment must be submitted in one PDF file.
Important: Students are not allowed to recreate the panels in Figure A and Figure B. Recreating these panels
(graphs) will result in a zero score for the homework assignment. Use these panels as images, do not draw-
them/re-create them manually or digitally. The grading of this homework assignment depends ONLY on dealing
with the “panels” as “images” when creating the four “diagrams.”
Practice diagrams:
Practice Diagram 3: The least economically-efficient advertising campaign.
(The instructor may help solve this diagram during class, but this is only for your practice, DO NOT SUBMIT
THIS DIAGRAM).
Practice Diagram 4: An advertising campaign that is most efficient in promoting the product Zeta, but least
cost efficient (i.e., least cost efficient is the same as most cost inefficient).
(The instructor may help solve this diagram during class, but this is only for your practice, DO NOT SUBMIT
THIS DIAGRAM).
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. Ibrahim 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. Ibrahim Abou-Saad
Demand Curve-1
MR-1
Figure A – Panel 2
MR-2
Demand Curve-2
Managerial Economics
Instructor: Dr. Ibrahim Abou-Saad
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. Ibrahim 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. Ibrahim 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. Ibrahim 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. Ibrahim 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. Ibrahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 2
LAC-2
LMC-2
Output (Q)
MR, AR, P, LAC, LMC
Managerial Economics
Instructor: Dr. Ibrahim 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. Ibrahim 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. Ibrahim Abou-Saad
LAC-1
LMC-1
Figure B – Panel 5
LAC-2
LMC-2
Grading Rubrics (out of 100% for the homework assignment):
Category Basic Work Figure Analysis Findings
Poor/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 incorrectly.
(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
correct 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 incorrectly.
(Up to 25%) The
overlapped diagrams
showed that the student
analyzed the demand
side or the supply side
simultaneously within
each diagram but had
difficulties showing the
shaded profit areas as a
factor in distinguishing
between some of the
created diagrams.
(Up to 35%) The
student showed the
correct optimal solution
in each created diagram
separately but was not
able to find the final
correct answers based
on comparing each two
created diagrams.
Above Expectations (Up to 30%) The
student correctly
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 between
some of the created
diagrams.
(40%) The student
showed the correct
optimal solution in
each created diagram
separately and was able
to find the final correct
answers by comparing
each two created
diagrams.
Sample of one diagram created from a previous class.
(e.g., information on the homework assignment)
The following is 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 necessarily 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-2
LMC-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. Ibrahim Abou-Saad
Positive Profits
