You are on page 1of 9

MG2452 / MG52 - Engineering Economics & Financial Accounting - Question Bank

Year: IV Question Bank UNIT-I (8 MARKS)
1. Managerial Economics is the discipline which deals with the application of „economic theory to business management‟. Comment. 2. What are the major areas of business decision making? How does economic theory contribute to managerial decisions? 3. Discuss the nature and scope of managerial economics. What are the other related disciplines? 4. “Managerial economics bridges the gap between economic theory and business practice”. Explain with examples. 5. Managerial economics is essentially the application of microeconomic theory of business decision making. Discuss the statement.

Semester: VII

(16 MARKS)
1. What are the other related topics than microeconomic theories in managerial economics? How do they contribute to the managerial economics? 2. “Managerial economic sis applied microeconomics”. Elucidate. 3. What are the basic functions of a manger? How does managerial economics help him in achieving his organizational goals? 4. Write a note on the nature and scope of managerial economics. 5. “Managerial economics is the integration of economic theory with business practice or the purpose of facilitating decision making and forward planning by management?” Explain. 6. How does the study of managerial economics help a business manager in decision –making? Illustrate your answer with examples from production and pricing issues. 7. What are the operational issues in business management? How does microeconomics contribute to decision-making in the operational issues? 8. What is the controversy on profit maximization hypotheses? How will you react to the controversy? 9. Profit maximization remains the most important objectives of business firms in spite of multiplicity o alternatives business objectives. Comment. 10. What is the concept of marginal principle? Discuss the important areas of business decisions in which marginal principle can be applied.

What is the law o diminishing marginal utility? Explain and illustrate the law with the help of MUschedule and MU-curve. (16 MARKS) 1. 8. or(d) all of the above possibilities exist? 4. Quantity demanded at price Rs.UNIT-II (8 MARKS) 1. 6. How does the analysis of demand contribute to business decision making/ 2. What are the expectations to this law? 3. Quantity demanded at zero prices. Why does a demand curve slope downward to the right? Can a demand curve slope upward to the right under any condition? 4. Suppose the demand function for a product is given as Q=500-5p. What is law of demand? Explain with the help o demand schedule and demand curve. List the major purpose of demand analysis from the standpoint of management. say X. What are the determinants of supply? Explain in detail the elasticity of supply. what happens to the demand for X : (a) rise. What is meant by consumer equilibrium? Explain consumer equilibrium with one and two commodity models. Define Marginal rate of substitution. (b) falls. and iv. /(c) remains constant. Derive an individual demand curve from MU-curve. rise. What are the different techniques of survey methods? Under what conditions are complete enumeration and sample survey methods are chosen? 9. . Discuss critically the different methods of demand forecasting. What is indifference curve? What are its properties or characteristics? What role does it play in consumer analysis? 2. What is the purpose of demand forecasting? Describe the uses and limitations of the trend methods of forecasting demand. Price of zero demand. What is the law behind the diminishing marginal rate of substitution? 3. 10. Find out i. When prices of both substitutes and comp0lements of a commodity. Price to sell 200 units iii. What is supply? Explain the supply determinants and its functions. Can management manipulate all the variables which affect demand? 7.15 ii. 5. 5.

State and illustrate the Cobb-Douglas production function.5 K 0. What are the pro0perties of isoquants? (16 MARKS) 1. which cause increasing returns to scale. Explain the factor. What are the reasons for the operation of the law of diminishing returns? 2. What is meant by internal and external economies of scale? 4. Suppose a Cobb-Douglas production function is given as Q=L 0. What is meant by production? Define production function and describe the underlying assumptions. How is the optimum combination of inputs affected if a) Price of only one input decreases and b) Price of both the inputs decrease proportionately? 5. Using the map of isoquants and isocosts. Find the output at which APL=MPL. show the role of change in relative input prices and relative productivities in the determination of least-cost combination. Derive MPL and APL schedules ii. . 4. Derive MPL functions iii. What are the criteria for the least-cost combination of inputs? Explain graphically? 5. Find L for producing 600 unit of output. Show the effects of change in input prices on the isocost line. 3.5 a. Distinguish between laws of returns to variable proportions and laws of returns to scale. Define and explain isoquants. Find the degree of production functions and b. Find the law of production it reveals. Define optimum input-combinations. and iv. Suppose a short-run production function is given as Q=10L+15L2-L3 where Q is output and L is labor employed per unit of time i. 3. 2.UNIT-III (8 MARKS) 1.

What is meant by price discrimination? State the necessary conditions for price discrimination. 8. What is kinked demand curve analysis? What purpose does it serve in economic analysis? Define dominant ‟Price leadership” model and discuss its advantages. 5. What is meant by „peak-load pricing? Why is sometimes peak – load pricing inevitable? (16 MARKS) 1. 4. Firm 1 is a low-cost firm whereas Firm 2 is a high-cost firm. Show that price is higher and output smaller under monopoly compared to these under perfect competition. Profit maximizing price c. Average revenue function. Is profit always maximum when MC=MR? Can a monopolist charge any price for his product? Give reasons for you answer. Find total cost function is given as TC = 50. Suppose there are two oligopoly firms-firm 1 and Firm 2. respectively. 3. Comment. Even though AR=Ac in both monopolistic competition and perfect competition. Total revenue function. What are the characteristics of perfect competition? Distinguish between pure and perfect competition. and d. Profit maximizing output b. 5. Suppose demand curve for a monopoly firm is given as P=405-4Q And its total cost (TC) function is given as TC=40+5Q+Q2 Find the following a. Why is profit maximum at a level of output where MC=MR. Q = 50 – 0. which of the two market situation is preferable from the society‟s point of view and why? What is the basic difference between monopolistic competition and oligopoly? In which of the two kinds of the markets are price and output determinate? 7. 2. 4.5p .UNIT-IV (8 MARKS) 1.000-100Q Find a) Profit maximizing output b) Allocation of output between the two markets c) Prices for two markets and d) Total profit at profit maximizing output. 3. Describe mark-up pricing and show that mark-up pricing is based on marginal rule. What is competitive bidding? Describe the technique of competitive bidding of price under the condition of uncertainty. Equilibrium under oligopoly is indeterminate ‟. A monopoly firm has to supply two markets with two different demand functions as given below P1 = 500-Q1 P2 = 300-Q2 Where P1 and P2 are prices and Q1 and Q2 are quantities in tow markets. Discuss the excess-profit as a measure of „the degree of monopoly‟. 2. Illustrate the third degree price discrimination assuming two different markets. Explain in detail the different structures of market. Both the firms face an identical demand curve given by the demand function as. What force limit the pure monopolist‟s market powers? 6.

as TC1 = 100 + 20Q1 + 2Q12 TC2 = 48 + 36 Q2 = 2Q2 and find the following a).The cost functions of the two firms are given. b) Price and output of Firm 2 after it accepts the price leadership of Firm 1. . Price and output of the firms separately prior to firm 1 working as the price leader. respectively.

and (ii) there is an external market or it. What kind of pricing strategy is adopted over the life-cycle of a product? What do you think will be an appropriate price policy when the demand reaches its saturation and substitute products are likely to enter the market? 12. 10. Why can ‟t single average price be fixed for all products? . Discuss the technique of multiple product pricing. 11. Discuss the controversy between marginal theorists and the empiricists on the relevance of „marginal rule‟ in pricing th3 products by the manufacturing firms. Illustrate your answer. Distinguish between skimming price and penetration price policy. Which of these policies is relevant in pricing a new product under different competitive conditions in market? How is transfer price determined if (i) there is no external market for the transfer product.9.

UNIT-V (8 MARKS) 1.000 UNIT I 1. How is demand curve for investment derived? What is the optimal level of capital stock and how is it determined? 2. How does uncertainty create a different situation for investment decision-making compared to risk. prepare a common-size statement: ASSETS Cash Debtors Stock Prepaid Expenses Bills 10.000 2. Describe isoproduct curve and its features.000 TOTAL 1999 Rs. .000 1.11.000 11.00. From the following Balance sheet. 3.50.50. Explain the different elasticity of supply. Describe cost of production in the long run average cost curve 4. Describe various demand forecasting techniques 2.35. Discuss the nature and scope of managerial economics 1.20.500 6. Explain law of demand and its exception. Illustrate graphically investment decisions with the help of these curves. 3.000 2000 Rs.26.000 Receivables Fixed 6.11 3. UNIT II 1. Define the concepts of risk and uncertainty. Discuss the various types of firms. 2. 4. UNIT III 1.000 1.000 21. 4.03. Explain the types of elasticity of supply and list out the various factors affecting the same.000 Assets 10. 5. 27.500 2.1.000 10. Discuss the relationship between managerial economics and other disciplines.000 10. Explain the concept of the present value of a future income? Explain why it is necessary in an investment decision to discount the future income stream.3.4 2. Define risk-return possibility curve and risk-return indifference curve. 31.

Net Profit Ratio 3. UNIT IV 1. 4.19 UNIT V 1.6. Operating Profit Ratio 5. 4. 3. Describe production function with one variable input factor. Gross Profit Ratio 2.4.4. Explain long run average and short run average cost curves with neat sketch. Explain different pricing methods 2. 4.9 4. Explain the features of perfect competition and discuss how price and output can be determined under perfect competition. Pay Back Period Method. Operating Ratio 4.9. 4. Particulars 10000 By sales 44000 By closing stock 20100 Rs. 56000 10000 66000 . Explain various cost based and competition based pricing methods. From the following Profit and Loss Account of a company ascertain the following ratios.27 3.6.2005 Dr Cr Particulars To opening stock To purchases To gross profit Rs. Explain the following: Net Present Value Method. 3.2.19. What is ratio analysis? Discuss the classification of ratio analysis. Profitability Index Method and Internal Rate of Return Method.3. Explain in detail the returns to scale.7.6. 6.12 2. Differentiate cash flow and fund flow statement. Explain how price and output can be determined under monopoly. Stock Turnover Ratio Trading and Profit & Loss Account for the year ending 31. Discuss the advantages and limitations of financial statement analysis. 1.

To administration expenses To selling expenses To interest To net profit 66000 2000 By gross profit 8900 By dividend 3000 By profit on sale of investments 8000 21900 20100 10000 800 21900 .