MS-009: Managerial Economics last 3 yrs paper
June,2021
SECTION A
- What is the basic objective of a firm? Explain with the help of examples.
- How is a decision taken under risk? Explain.
- Describe the relationship of Price Elasticity with that of Revenue.
- Explain different types of statistical analysis used for the estimation of production function.
- Differentiate between Peak-load Pricing and Bundling.
- Read the following case situation and answer the questions given at the end:
Additional case study: Monopolies
Many European governments are reluctant to allow online betting in an attempt to protect their national gambling businesses. A recent study found that seven countries out of the 27 in the European Union banned online gambling. Of the other 20, only 13 have opened their markets to competition; in the rest, gambling is dominated by monopolies owned or licensed by the government. In the Netherlands, for example, residents can only place online bets with a State monopoly, De Lotto. The Ministry of Justice even warned banks in the country that they could be prosecuted if they transferred money to online MS-09 3 P.T.O. gambling companies. Other countries have ordered online betting companies to block access to their sites. Their governments argue that this is to protect people from gambling excessively. However, the revenue they gain from their own monopolies should not be ignored as a possible motive.
Questions
- If governments believe that gambling is bad for their citizens, then in economic terms, how would you classify this service?
- Why might governments want to protect their own monopolies in the gambling sector
- What might be the effect of greater competition in the gambling industry in these countries?
- Should governments promote gambling? Discuss
- Read the following case situation and answer the questions given at the end:
- Explain, using supply and demand analysis, why the price of sugar has been increasing recently.
- Do you think (i) the supply, and (ii) the demand for sugar is price elastic or inelastic? Justify your choices and explain whether this means any given change in supply or demand will have a bigger effect on the equilibrium price of quantity.
- In what ways is the market for sugar used in confectionery related to the market for ethanol
- How might companies such as Mars and Nestlé react to an increase in the price of sugar?
SECTION B
Additional case study: government intervention
The price of raw sugar recently reached its highest level since 2011 due to problems with supply. Historically, raw sugar has traded at between 10 and 12 US cents per pound at the New York Board of Trade. But the price increased to over 18 cents last month.
Growing demand in Brazil for sugar to be turned into ethanol for fuel, coupled with a sharp fall in Indian production have both been factors in the price increase.
Sugar production in India for 2014-15 fell 45% year-on-year due to less rain in the monsoon season damaging a number of agricultural crops.
The London-based International Sugar Organisation predicts that global consumption of sugar is likely to outstrip production by 9 m tonnes next year, forcing food companies and governments to dig into stockpiles. In the US, snack producers including Mars, Nestlé and Krispy Kreme Doughnuts put pressure on the US government to relax import controls, warning that otherwise they might run out of sugar.
Commentators predict that most shoppers will be unaffected because sugar is such a small part of a consumer’s typical spending in a week that no one will notice an increase in price.
Questions
December, 2020
SECTION A
- What is the fundamental nature of Managerial Economics? Discuss
- List the basic techniques involved in decision-making. Explain any two of these techniques.
- What do you understand by a demand function? List and explain the impact of any five variables on the demand function.
- Differentiate between Accounting Costs and Economic Costs. Support your answer with suitable examples.
- How is the evaluation of monopoly done? Explain.
- Read the following case situation and answer the questions given at the end:
Increased Prices for drinks
In 2010 the government’s main medical adviser drew up plans for a minimum price for alcohol intended to double the cost of some drinks. Under the proposal no drinks could be sold for less than 50 pence per unit of alcohol they contain. This would mean most bottles of wine could not be sold for under £ 4.50. The proposal is aimed at reducing alcohol abuse. A spokesman for an opposition party said that it was more important to deal with peoples’ attitudes and not just the price of alcohol. The Portman Group, set up by drinks manufacturers to promote sensible drinking, argues that it would damage the majority of drinkers who behave responsibly in terms of their consumption
The NHS bill for alcohol abuse is an estimated £ 2.7 bn a year. Recent figures show hospital admissions linked to alcohol use have more than doubled in England since 1995. Alcohol was the main or secondary cause of 207,800 NHS admissions in 2006/07, compared to 93,500 in 1995/96. The number of alcohoL-related deaths in England has doubled since the early 1990s to nearly 9,000 a yearQuestions
- What sort of product is alcohol in economic terms if the government wants to restrict consumption of it?
- Analyze the social costs of alcohol consumption.
- Analyze the factors that would determine the impact of a price increase on the consumption of alcohol
- Is introducing a minimum price a better way of reducing consumption than trying to change peoples’ attitudes?
- Read the following case situation and answer the questions given at the end:
- What is meant by productivity?
- Analyze the impact of a fall in productivity on costs
- Analyze the possible consequences for businesses in India of banning access to Social Media-S and other social networking sites
- Do you think access should be denied?
SECTION B
Social Media-S
Firms in India are losing productivity because of Social Media-S. Office staff are spending too long on the social networking site. According to The Associated Chambers of Commerce and Industry (Assocham) employees use different social networking sites for “romancing” and other purposes. On average, employees spend an hour a day on sites like Social Media-S. This reduces productivity by 12.5%. Nearly half of office employees accessed Social Media-S during work time. Some 83% saw nothing wrong in surfing at work during office hours. In September, 2009 Portsmouth City Council in England banned staff from accessing Social Media-S on its computers when it was discovered that they spent, on average, 400 hours on the site every month
Questions
June, 2020
- What are the basic objectives of a firm? Explain with the help of an illustration.
- Differentiate between derivatives and partial derivatives with the help of illustrations.
- Differentiate between derivatives and partial derivatives with the help of illustrations.
- What do you understand by the marketing approach to demand measurement? Discuss.
- Write notes on:
(a) Average cost and marginal cost
(b) Direct cost and indirect cost
(c) Fixed cost and variable cost
- Economists say that ‘the firm’ plans in the long run and operates in the ‘short run’. Critically examine the statement.
- What is a cost function? How is it estimated? Explain with the help of examples.
- Explain the concept of oligopolistic competition. Discuss the pricing policy under oligopolistic competition.
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