I SEMESTER MBA DEGREE (CSS) EXAMINATION, NOVEMBER, 2007 MGT 513 ECONOMICS FOR BUSINESS Time: Three Hours

PART - A Answer all questions Each question carries three marks 1. 2. 3. 4. 5. What is a demand function? What is discriminating monopoly? Explain the meaning of Gross National product? Define the term acceleration? What is cost-push inflation? (5*3 = 15 marks) PART - B Answer any three questions Each question carries ten marks 6. What is elasticity of demand? How do you measure the different type of elasticity of demand? Examine the influence of elasticities in managerial decision making. Find the elasticity of demand with respect to price for the demand function D = 30 2(p-1)2 when p = 2. 7. What is a linearly homogenous production function? Explain the properties of cobb-Douglas Production Function. 8. With the help of the static model explain Baumols argument that sales revenue maximization seems the most plansible goal of managers. 9. Explain the use of IS-LM theory as a model of general equilibrium. Get the IS and LM functions from the following information and determine the equilibrium income and rate of interest. C = 100 + 0.8 Y. I = 150 600i, ms = 200, m1 = 0.2Y and m2 = 50 400i. 10. Explain the objectives and instruments of monetary policy. PART - C This is a compulsory question The question carries fifteen marks. Maximum: 60 marks

11. The following table shows the units of output produced, Total Fixed Cost and Total Variable Cost of a firm. Units of Output TFC

10 1200

20 1200

30 1200

40 1200

50 1200

60 1200

80 1200

TVC 600 800 900 1050 1400 2100 3800 From the table find TC, AFC, AVC, AC and MC Schedules. Plot the AFC, AVC, AC and MC Schedules on the same graph and explain the relation between AVC. AC and MC Curves. The given cost function of a firm is C = 860 + 200x + 20x2 + 0.3x3. Calculate AFC, AVC, AC and MC when x = 10 units. (1* 15 marks)