Question

Question 1 2.5 Marks
a. The shareholder of Al-Karam wants to maximize his profits by selling his goods in the larger quantities. In order to achieve his target (s) he hired a manager to look after his business. However, the manager instead of maximizing business profits started maximizing his own interest by selling the designs in black to the competitor’s designers. Analyze the above situation and explain the possible problem that might occur for Al-Karam.

b. Sahar is analyzing the probability to open her own beauty salon. If she chooses to operate her own salon she would have to pay Rs. 70,000 p.m as rent and staff that would cost her Rs. 30,000 p.m and is expected to earn Rs. 150,000 p.m. While if she continues working as the head makeup artist in one of renowned salons of Karachi she would earn 120,000. Analyze the information above and find explicit and implicit cost.
Question 2 2.5 Marks
a. Keeping the present rate of inflation (increase in the general price level) in mind, consumers living in Karachi are anticipating that the price of tomatoes will go up just like it did last year in November. In your opinion explain if there would be any impact on the current demand for tomatoes or not. Also, if there would be any change elucidate the movement or shift in the demand curve graphically.

b. Suppose that Zimal and Zawaiyar are the only consumers of perfumes in a particular market. The following table shows their annual demand schedules:

Price (Per Bottle of Perfume) Zimal’s Quantity Demanded Zawaiyar’s Quantity Demanded Market Supply
100 600 650 250
200 500 550 450
300 400 450 850
400 300 350 1050
500 200 250 1250
600 100 150 1450

Answer 1

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Answer 2

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