Year: IV
Semester: VII
Question Bank
UNIT-I
(8 MARKS)
1.
Managerial Economics is the discipline which deals with the application of „economic
theory to business management‟. Comment.
2.
What are the major areas of business decision making? How does economic theory
contribute to managerial decisions?
3.
Discuss the nature and scope of managerial economics. What are the other
related disciplines?
4.
“Managerial economics bridges the gap between economic theory and business
practice”. Explain with examples.
5. Managerial economics is essentially the
application of microeconomic theory of business decision making. Discuss the
statement.
(16 MARKS)
1.
What are the other related topics than microeconomic theories in managerial
economics? How do they contribute to the managerial economics?
2.
“Managerial economic sis applied microeconomics”. Elucidate.
3.
What are the basic functions of a manger? How does managerial economics help
him in achieving his organizational goals?
4.
Write a note on the nature and scope of managerial economics.
5.
“Managerial economics is the integration of economic theory with business
practice or the purpose of facilitating decision making and forward planning by
management?” Explain.
6.
How does the study of managerial economics help a business manager in decision
–making? Illustrate your answer with examples from production and pricing
issues.
7.
What are the operational issues in business management? How does microeconomics
contribute to decision-making in the operational issues?
8.
What is the controversy on profit maximization hypotheses? How will you react
to the controversy?
9.
Profit maximization remains the most important objectives of business firms in
spite of multiplicity o alternatives business objectives. Comment.
10. What is the concept of marginal principle?
Discuss the important areas of business decisions in which marginal principle
can be applied.
UNIT-II
(8 MARKS)
1.
How does the analysis of demand contribute to business decision making/
2.
What is law of demand? Explain with the help o demand schedule and demand
curve. What are the expectations to this law?
3.
When prices of both substitutes and comp0lements of a commodity, say X, rise,
what happens to the demand for X : (a) rise, (b) falls, /(c) remains constant,
or(d) all of the above possibilities exist?
4.
What is the purpose of demand forecasting? Describe the uses and limitations of
the trend methods of forecasting demand.
5. What is supply? Explain the supply determinants
and its functions.
(16 MARKS)
1.
What is indifference curve? What are its properties or characteristics? What
role does it play in consumer analysis?
2.
Define Marginal rate of substitution. What is the law behind the diminishing
marginal rate of substitution?
3.
Why does a demand curve slope downward to the right? Can a demand curve slope
upward to the right under any condition?
4.
What is meant by consumer equilibrium? Explain consumer equilibrium with one
and two commodity models. Derive an individual demand curve from MU-curve.
5.
What is the law o diminishing marginal utility? Explain and illustrate the law
with the help of MU-schedule and MU-curve.
6.
List the major purpose of demand analysis from the standpoint of management.
Can management manipulate all the variables which affect demand?
7.
Suppose the demand function for a product is given as Q=500-5p. Find out
i.
Quantity demanded at price Rs.15
ii.
Price to sell 200 units
iii.
Price of zero demand, and
iv.
Quantity demanded at zero prices.
8.
What are the different techniques of survey methods? Under what conditions are
complete enumeration and sample survey methods are chosen?
9.
What are the determinants of supply? Explain in detail the elasticity of
supply.
10. Discuss critically the different methods of demand
forecasting.
UNIT-III
(8 MARKS)
1.
What is meant by production? Define production function and describe the
underlying assumptions.
2.
State and illustrate the Cobb-Douglas production function.
3.
What is meant by internal and external economies of scale?
4.
Define optimum input-combinations. What are the criteria for the least-cost
combination of inputs? Explain graphically?
5. Define and explain isoquants. What are the
pro0perties of isoquants?
(16 MARKS)
1.
Distinguish between laws of returns to variable proportions and laws of returns
to scale. Explain the factor, which cause increasing returns to scale. What are
the reasons for the operation of the law of diminishing returns?
2.
Using the map of isoquants and isocosts, show the role of change in relative
input prices and relative productivities in the determination of least-cost
combination.
3. Suppose a short-run production function is given
as
Q=10L+15L2-L3
where Q is output and L is labor employed per unit
of time
i.
Derive MPL and APL schedules
ii.
Derive MPL functions
iii.
Find the output at which APL=MPL; and
iv.
Find L for producing 600 unit of output.
4.
Show the effects of change in input prices on the isocost line. How is the
optimum combination of inputs affected if
a)
Price of only one input decreases and
b) Price
of both the inputs decrease proportionately?
5. Suppose a Cobb-Douglas production function is
given as
Q=L 0.5 K 0.5
a.
Find the degree of production functions and
b. Find the law of production it reveals.
UNIT-IV
(8 MARKS)
1.
Explain in detail the different structures of market. Equilibrium under
oligopoly is indeterminate‟. Comment.
2.
What are the characteristics of perfect competition? Distinguish between pure
and perfect competition.
3.
Describe mark-up pricing and show that mark-up pricing is based on marginal
rule.
4.
What is competitive bidding? Describe the technique of competitive bidding of
price under the condition of uncertainty.
5. What is meant by „peak-load pricing? Why is
sometimes peak – load pricing inevitable?
(16 MARKS)
1.
What is kinked demand curve analysis? What purpose does it serve in economic
analysis? Define dominant ‟Price leadership” model and discuss its advantages.
2.
What is meant by price discrimination? State the necessary conditions for price
discrimination. Illustrate the third degree price discrimination assuming two
different markets.
3. Suppose demand curve for a monopoly firm is given
as
P=405-4Q
And its total cost (TC) function is given as
TC=40+5Q+Q2
Find the following
a.
Profit maximizing output
b.
Profit maximizing price
c.
Total revenue function, and
d. Average revenue function.
4. Why is profit maximum at a level of output where
MC=MR. Is profit always maximum when MC=MR? Can a monopolist charge any price
for his product? Give reasons for you answer.
5.
Show that price is higher and output smaller under monopoly compared to these
under perfect competition. Discuss the excess-profit as a measure of „the
degree of monopoly‟. What force limit the pure monopolist‟s
market powers?
6.
Even though AR=Ac in both monopolistic competition and perfect competition,
which of the two market situation is preferable from the society‟s
point of view and why? What is the basic difference between monopolistic
competition and oligopoly? In which of the two kinds of the markets are price
and output determinate?
7. A monopoly firm has to supply two markets with
two different demand functions as given below
P1 = 500-Q1
P2 = 300-Q2
Where P1 and P2 are prices and Q1 and Q2 are
quantities in tow markets, respectively.
Find total cost function is given as
TC = 50,000-100Q
Find
a)
Profit maximizing output
b)
Allocation of output between the two markets
c)
Prices for two markets and
d) Total profit at profit maximizing output.
8. Suppose there are two oligopoly firms-firm 1 and
Firm 2. Firm 1 is a low-cost firm whereas Firm 2 is a high-cost firm. Both the
firms face an identical demand curve given by the demand function as.
Q = 50 – 0.5p
The cost functions of the two firms are given,
respectively, as
TC1 = 100 + 20Q1 + 2Q12
TC2 = 48 + 36 Q2 = 2Q2 and find the following
a). Price and output of the firms separately prior
to firm 1 working as the price leader.
b) Price and output of Firm 2 after it accepts the
price leadership of Firm 1.
9. Discuss the
controversy between marginal theorists and the empiricists on the relevance of „marginal
rule‟
in pricing th3 products by the manufacturing firms.
10. Distinguish between skimming price and
penetration price policy. Which of these policies is relevant in pricing a new
product under different competitive conditions in market? How is transfer price
determined if (i) there is no external market for the transfer product, and
(ii) there is an external market or it.
11. What kind of pricing strategy is adopted over
the life-cycle of a product? What do you think will be an appropriate price
policy when the demand reaches its saturation and substitute products are
likely to enter the market?
12. Discuss the technique of multiple product pricing.
Illustrate your answer. Why can‟t single average price be fixed for all products?
UNIT-V
(8 MARKS)
1.
How is demand curve for investment derived? What is the optimal level of
capital stock and how is it determined?
2.
Explain the concept of the present value of a future income? Explain why it is
necessary in an investment decision to discount the future income stream.
3.
Define the concepts of risk and uncertainty. How does uncertainty create a
different situation for investment decision-making compared to risk.
4.
Define risk-return possibility curve and risk-return indifference curve.
Illustrate graphically investment decisions with the help of these curves.
5. From the following Balance sheet, prepare a
common-size statement:
|
ASSETS
|
1999
Rs.
|
2000
Rs.
|
|
Cash
|
27,000
|
31,500
|
|
Debtors
|
2,20,000
|
2,11,000
|
|
Stock
|
1,00,000
|
1,26,000
|
|
Prepaid Expenses
|
11,000
|
21,000
|
|
Bills Receivables
|
10,000
|
10,500
|
|
Fixed Assets
|
6,35,000
|
6,50,000
|
|
TOTAL
|
10,03,000
|
10,50,000
|
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