MS-09 Managerial Economics Test Paper

MBA - Master of Business Administration

Note: Attempt any five questions. All questions carry equal marks.

1. What are the various factors which may influence the demand for intermediate goods like cables? Explain the most appropriate method of forecasting the demand for such an item.

2. a) Explain the method of cost-plus pricing and state its limitations. Point out cases where it is suitable.

b) Briefly outline the statistical method of estimating cost function.

3. a) Explain the concept of law of diminishing marginal utility with a suitable example. Why is it relevant for managers in taking decisions relating to expansion or diversification?

b) A consumer utility function is U = 1 log x1 + log x2. His budget constraint is given by 2x1 + 4x2 = 36. Find out how many units of x1 and x2 should the consumer buy in order to maximize his utility.

4. Why is demand analysis significant for management? Identify various concepts of demand relevant for various functional areas of management.

5. State the assumption underlying the economists' theory of firm. Develop a critique of the theory and suggest the need for alternative models.

6 'Price leadership is an alternative cooperative method used to avoid tough competition'. Comment.

7. Distinguish between short-run production function and long-run production function. The law of diminishing returns is sometimes known as the law of variable proportions. How? Explain the law with example and figure.

8. Distinguish between any four of the following:
a) Demand curve and demand schedule
b) Implicit and Explicit costs
c) Isoquant and Isocost
d) Short-run and long run cost functions
e) Social cost-benefit analysis and financial analysis
f) Price elasticity and income elasticity of demand