Managerial Economics
SECTION –A
Attempt any 15
1. When a firm’s average revenue is equal to its average cost, it gets ________.
a. Super profit
b. Normal profit
c. Sub normal profit
d. None of the above
2. Given the price, if the cost of production increases because of higher price of raw materials, the supply
a. Decreases
b. Increases
c. Remains same
d. All of the above
3. Which of the following is a characteristic of a perfectly competitive market?
a. Firms are price setters.
b. There are few sellers in the market
c. Firms can Exit and enter the market freely.
d. All of the above
4. Managerial Economics as a specialized branch of Economics.
a. Provide ready-made solutions to business problems
b. Provide logic and methodology to find solutions to business problems
c. provide alternative answers to specific business problems.
d. Provide theoretical background to analyze business problems
5. The first stage in the five-step decision process described in the text is to
a. define the problem.
b. select the best possible solution.
c. determine the objective.
d. identify possible solutions.
6. At the point of equilibrium of firm (under perfect competition):
a. MC curve must be rising
b. MC curve must be falling
c. MR curve must be rising
d. None of these
7. Given the price, if the cost of production increases because of higher price of raw materials, the supply
a. Decreases
b. Increases
c. Remains same
d. Any of the above
8. The cost recorded in the books of accounts are considered as
a. Total cost
b. Marginal cost
c. Average cost
d. Explicit cost
9. In a perfectly competitive industry, a firm can
a. Make an economic profit in the short-run but not in the long-run
b. Make an economic loss in the short-run but not in the long-run
c. Make an accounting profit, but not an economic profit, in the long-run
d. All of the above
10. A tabular representation of different quantities of a commodity demanded at different prices are known as
a. Demand series
b. Demand schedule
c. Demand pattern
d. Statistical demand table
11. By tying a manager’s compensation to the performance of the firm relative to that of its competitors, corporate stockholders and directors create incentives that tend to resolve the
a. possibility of bankruptcy.
b. hidden agenda scenario.
c. principal-agent problem.
d. firm’s opportunity costs
12. Carrying the line of only one manufacturer is known as
a. Exclusive assortment
b. Open bid
c. Negotiated contract
d. Deep assortment
13. Adoption rate will be higher and faster if the product has
a. Lower price
b. Greater utility
c. Compatibility with society
d. All of the above
14. Under ______, price is determined by the interaction of total demand and total supply in the market.
a. Perfect competition
b. Monopoly
c. Imperfect competition
d. All of the above
15. If price changes from $1.00 to $0.95 what is arc elasticity?
a. %2.5
b. %5
c. %25
d. %50
16. If the variable is greater than 1 the elasticity is
a. relatively inelastic
b. relatively elastic
c. unitarily elastic
d. unitarily inelastic
17. The measure of the sensitivity to which the percentage change in one variable affects another variables percentage change is referred to as ________
a. demand
b. Elasticity
c. supply
d. All the above
SECTION –B
Q2. Attempt any 10 (10X3=30)
1. State the definition of law of equi-marginal utility?
2. Explain the scope of managerial economics?
3. What is the significance of managerial economics?
4. What are the objectives of profit planning?
5. Define Marginal propensity to consume (MPC)?
6. Distinguish fixed and variable cost?
7. What is demand forecasting?
8. What is meant by Cartels?
9. What is price discriminations?
10. What is cost Benefit Analysis?
11. Explain the term disinvestment with example?
12. What are the features of Oligoploy?
SECTION –C
Q3. Attempt any 2 (10X2=20)
1. Explain the various methods of computing National income and narrate the practical difficulties in the estimation of National income?
2. Define “Production Function”. Explain with diagram , the three stages of the Law of Variable Proportions?
3. Explain the following pricing strategies:-
a. Cost plus Pricing
b. Penetration Pricing
4. What is Capital Budgeting? Describe the steps involved in project Evaluation?
5. Justify the need for government intervention in the economy?
6. Explain the classification of market on the basis of degree of competition?
Q4. Attempt any 1 (20X1=20)
CASE 1:
The case discusses India’s demonetization in 2016 which resulted in the scrapping of high value currency notes of Rs. 500 and Rs. 1,000. This was the third time in the history of India that the government had junked notes of high denomination to attack black money. The primary objectives of the 2016 demonetization were to curb the circulation of counterfeit notes in the economy along with removing black money, corruption, and stopping funding of activities of terrorism. Though the move was intended to curb illicit activities, it ended up causing chaos among the common people of the country and suffering to small businesses and traders due to the cash crunch. There were serpentine queues of people outside banks and ATMs to exchange the junked notes and withdraw new currency of Rs. 500 and Rs. 2,000.
1. Give your View on Chaos, Confusion, Fear and Bright side of demonetization?
2. Wave of demonetization across the world?
