MS 9 Managerial Economics Question Paper

MBA - Master of Business Administration

Note: There are Section A and B. Section A consists of five Questions carrying 20 marks each. Attempt any three questions from this Section. Section B is compulsory and carries 40 marks.

SECTION-A

1. Discuss the fundamental nature of Management Economies with respect to the three choice problems of the economy.

2. The demand function of a product is given as Q = 500-5P. Find out the point price elasticity demand when

a) P = Rs. 15 and Q = 200

a) P = Rs. 50 and Q = 200

What inferences do you draw from the results when the price of a commodity increases from Rs. 15 to Rs. 50, the quantity demanded remaining constant?

3. Distinguish between accounting costs and Economics costs. Explain giving suitable examples.

4. Explain the functional forms of cost function giving illustration.

5. "It is believed that a firm under a perfect competition is a price-taker and not a price-maker." Explain giving examples.

SECTION-B

5. (A) The following table gives the information regarding the units produced. TE and TC of production of a North Indian Tool's factory. Complete the table:

(i) Determine the profit maximizing output level.

(ii) Is profit maximum at the output where marginal profit equals zero? Is this always the case or is this unique to this particular problem?

(iii) Is profit maximum where total revenue equals total cost? Explain.

(B) Case: Price cutting at the Times of India

The Times of India, is one of the leading newspaper in India. In September 1972, it lower its price from 45 paise to 20 paise while prices of its rivals remained unchanged. The number of newspapers sold by TOI and its rivals was as follows:

(i) Based on the figures, find the price elasticity of demand or TOI.

(ii) Was the cross elasticity of demand between Statesman and TOI positive or negative?

(iii) Would you expect it to be positive or negative? Why?