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DRIVE
SPRING 2014
PROGRAM-
MBADS/ MBAFLEX/ MBAHCSN3/ MBAN2/ PGDBAN2
SEMESTER-
1
SUBJECT
CODE & NAME- MB0042- MANAGERIAL ECONOMICS
BK ID-
B1625
Q1.
Inflation is a global Phenomenon which is associated with high price causes
decline in the value for money. It exists when the amount of money in the
country is in excess of the physical volume of goods and services. Explain the
reasons for this monetary phenomenon. (Define Inflation, Causes for Inflation)
2, 8
Answer: Inflation is defined as a
sustained increase in the general level of prices for goods and services. It is
measured as an annual percentage increase. As inflation rises, every dollar you
own buys a smaller percentage of a good or service.
The value of a dollar does not stay constant when there is inflation. The value of a dollar is observed in terms of purchasing power, which is the real, tangible goods that money can buy. When inflation goes up, there is a decline
Q2.
Monopoly is the situation there exists a single control over the market
producing a commodity having no substitutes with no possibilities for anyone to
enter the industry to compete. In that situation, they will not charge a
uniform price for all the customers in the market and also the pricing policy
followed in that situation. (Define Monopoly, Features of Monopoly, Kinds of
Price Discrimination) 2, 4, 4
Answer:
Monopoly
Monopoly means
existence of a single seller in the market. Monopoly is that market form in
which a single producer controls the whole supply of a single commodity which
has no close substitutes. Monopoly may be defined, as a condition of
production in which a single firm has the power to fix the price of the
commodity or the output of the commodity.
Features of monopoly
Q3.
Define Fiscal Policy and the instruments of Fiscal policy. (Definition of
Fiscal policy, Explanation of Instruments of Fiscal Policy) 2, 8
Answer:
Fiscal Policy
The term “fisc” in
English language means “treasury”, and the policy related to treasury or
government exchequer is known as fiscal policy. Fiscal policy is a package of economic
measures of the Government regarding public expenditure, public revenue, public
debt or public borrowings.
In short, it refers to
the budgetary policy of the government. Fiscal policy is concerned with the
manner in which all the different elements of public finance, while still
primarily concerned with carrying out their own duties (as the first duty of a
tax is to raise revenue), may collectively be geared to forward the aims of
economic policy.”
Q4.
Describe Cost-Output Relationship in brief. (Definition of cost-output
relationship, Explanation of Cost-output relationship in short run and long run
in brief) 3, 7
Answer:
Cost-Output
Relationship: Cost Function
Cost-output relations
play an important role in almost all business decisions. It throws light on
cost minimisation or profit maximisation and optimisation of output. The
relation between the cost and output is technically described as the “cost
function”. The significance of cost-output relationship is so great that in
economic analysis, the cost function usually refers to the relationship between
cost and rate of output alone and we assume that all other independent
variables are kept constant. Mathematically speaking TC = f (Q) where TC =
Total cost and Q stands for output produced. However, cost function depends on
three important variables. These variables are as follows:
Q5.
Discuss the practical application of Price elasticity and Income elasticity of
demand. (Practical application of price elasticity, Practical application of
Income elasticity) 5, 5
Answer:
Practical application
of price elasticity of demand
Few examples on the
practical application of price elasticity of demand are as follows:
1. Production
planning – It helps a producer to decide about the volume of production.
If the demand for his products is inelastic, specific quantities can be
produced while he has to produce different quantities, if the demand is
elastic.
2. Helps in
fixing the prices of different goods – It helps a producer to fix the
price of his product. If the demand for his product is inelastic, he can fix a
higher price and if the demand is elastic, he has to charge a lower price.
Q6.
Discuss the scope of managerial economics. (Definition of Managerial Economics,
Scope of Managerial Economics) 2, 8
Answer:
Managerial Economics
Managerial economics
is a science that deals with the application of various economic theories, principles,
concepts and techniques to business management in order to solve business and
management problems. It deals with the practical application of economic theory
and methodology in decision-making problems faced by private, public and
non-profit making organisations. “Managerial
economics is the use of economic modes of thought to analyse business
situation”.
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