Managesiat Economics AMITY SCHOOL OF DISTANCE LEARNING Post Box No, 503, Sector-44 Noida - 201303 MANAGERIAL ECONOMICS ASSIGNMENT - A Answer all questions. Marks 10 1 finguish between the following: (Industry demand and Firm (Company) demand, (i) Short-run demand and Long run demand, and (il) Durable goods’ dernand and Non-durable goods demand, 2. Whatare the problems faced in determining the demand for a durable good? ilustrate with example of demand for households refrigerator or television set. 3. Analyse the method by which a firm can allocate the given advertising budget between different media of advertisement, 4. Whatkind of relationship would you postulate between short-run and long-run average cost curves when these are not U-shaped as suggested by the modern theories? 5. How do demand forecasting methods for new products vary from those for established products? Assignment — 154Managerial Economics AMITY SCHOOL OF DISTANCE LEARNING Post Box No. 503, Sector-44 Noida — 201303 MANAGERIAL ECONOMICS ASSIGNMENT -B Answer all questions. Marks 10 What are the different methods of measuring national income? Which methods have been followed in India? 2. Whatdo you understand by the investment multiplier? In what way does it defend the policy of public works on the part of the state during business depression? 3. Discuss the various phases of business cycle: (Ate cyclical fluctuations necessary for economic growth? (i) Suggest appropriate fiscal and monetary policies for depression 4, Case study: Please read the case study given below and answer questions given at the end. Case Study Electron Control, nc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sensitive test equipment. The yearly volume of outputs 15,000 units, The selling price and cost per unit are shown below: Salling price $200 Costs: Direct material $35 Directiabor 50 2B 8 Variable overhead Variable selling expenses Fixed selling expenses 15 150 Unit profit before tax $50 Management is evaluating the alternative of performing the necessary customizing to allow Electron Control to sell its ‘output directly to Q/A labs for $275 per unit. Although no added investment is required in productive facilities, additional processing costs are estimated as: Direct labor $25 per unit Variable overhead $15 per unit Variable selling expenses $10 per unit Fixed selling expenses ‘$100,000 per year ‘A. Caloulate the incremental profit Electron Control would eam by customizing its instruments and marketing directly to end users, 152 AssignmentAMITY SCHOOL OF DISTANCE LEARNING Post Box No. 503, Sector-44 Noida — 201303 MANAGERIAL ECONOMICS ASSIGNMENT - C . Managerial Economics | Answer all questions, Marks 10 Tick Marks (~) the most appropriate answer. 1 Econometrics is ‘Amodern name for economics b A specialized branch of economics which applies the tools of statistics to the economic problems . branch of economics which combines macroeconomic principles with welfare economics 4. e. > A branch of economics which combines microeconomic principles with international trade ‘specialized branch of economics which desoribes neo-classical microeconomics Which ofthe following comes under the broad definition for factors of production? Technology Obsolete machinery Innovations Capital Patent rights ‘Which of the following statements is true? a. When the supply increases, both the price and the quantity will increase. b. When the supply increases, the supply curve shifts towards the left . Ashi n the supply curve towards the right results in a fallin the price 4d. A decrease in the quantity supplied results in shifting of the supply curve towards the ieft. e. the ‘An increase in the quantity supplied leads to a fallin the price resulting in the shifting of the supply curve towards e left, Which of the following statement(s) is/are false? ‘a. Ifthe demand falls, the price wil fal. As the price rises the quantity demanded will fall. Ifdemand rises, the demand schedule shifts to the left Both (a) and (b) above. Both (a) and (c) above. e@aog Which of the following statements is false? ‘An increase in tax will affect the customers more than the producers if the supply schedule is inelastic. ‘An increase in tax will affect the customers more than the producers if the demand schedule is inelastic. ‘An increase in tax will fect the customers less than the producers if the supply schedule is inelastic. ‘An increase in tax will affect the customers less than the producers if the demand schedule is inelastic. Both (a) and (d) above. Assignment — 153‘Managerial Economics 6 10. "1 12, Which of the following statements is true? 1a. Elasticity of demand is constant throughout the demand curve. Elasticity of demand increases as one goes down the demand curve. Elasticity of demand decreases as one goes down the demand curve. ‘The siope of the demand curve equals its elasticity. “The price and total revenue move in the same direction when demand is elastic. pace For complementary goods, the cross elasticity of demand will be a. Zoro, b. Infinity ¢. Positive, but less than infinity. d. Negative. @. None ofthe above. When the income elasticity of demand for a good is negative, the good is ‘a, Normal good. Luxury good Inferior good. Giffen good Necessity. pees If both income and substitution-effects are strong, this region of the demand curve must be a. Relatively price elastic. b. Relatively price inelastic. cc. Unitelastic 4. Perfectly inelastic, ©. Perfectly elastic. Ifa good has close substitutes, a. lis demand curve willbe relatively elastc. . Its demand curve will be relatively inelastic, Its demand curve could be unit-elastic. 4, Either (a) or (c) @. Either (b) or (c) ‘The demand for most products vaties directly with the change in consumer income. Such products are known as a, Normal goods. Prestigious goods. Complementary goods. Inferior goods. Substitute goods. page Which of the following statements is true with regard to price elasticity of demand? a. Elasticity remains constant throughout the demand curve. b. Elasticity increases with increase in quantity demanded. c. Elasticity increases as the price decreases. 154 Assignment18. 14, 15. 16. 17. 18. d. Elasticity is equal to the slope of the demand curve, Managerial Economies e. Higher the elasticity, more responsive the demand is for a given change in price. Which of the following goods can be considered substitutes? a. Penand Paper. Car and Petrol. Bread and Butter. Tea and Coffee. Keyboard and Monitor. pags Which ofthe following statenients conceming indifference curves is true? a. Anindifference curve is the locus of points describing proportional price levels of the two goods. b. Indifference curves pre-suppose the measurement of total utility and marginal utility, ©. An indifference curve is the locus of points representing various combinations of two goods about which the con- sumer is indifferent, d._ Indifference curve pre-suppose the validity of the law of fe. Noneoftheabove ishing returns” Ifa change in ail inputs leads to a proportional change in the output, itis a case of a. Increasing retums to scale b. Constant returns to scale c. Diminishing returns to scale d. Variable retums to scale €. Inefficient retums to scale Isoquants are a. Equal cost tines b. Equal product lines c. Equalrevenue tines d. Equal total utility ines e. Equal marginal utility fines When average productis highest ‘a, Total product is maximum b, Marginal product is maximum ©. Marginal product is zero 4. Marginal product is negative ‘e, Marginal product is equal to average product IFmarginal product is negative, it means that the a, Total product is at maximum, Average product is at maximum ‘Average producti falling Total product is increasing Average productis negative pao Assignment 155Managerial Eeonomice 19. 20. 2 22. 23. 24, 26. Which of the following curves is called envelope curve? a. Long run total cost curve b. Long run average total cost curve ©. Long run marginal cost curve dd. Long run average variable cost curve 8. Long run average fixed cost curve Which of the following costs remain constant as the output increases? a, Marginal cost b. Average variable cost ©. Average fixed cost 4, Total variable cost e. Noneof the above In perfect competition, a fm maximizing its profts will set its output at that level where a. Average variable cost = price b. Marginal cost = price ©. Fixed cost = price 4d. Average fixed cost = price e. Total cost = price Which of the following curves resembles supply curve under perfect competition in the short run? Average cost curve above breakeven point b. Marginal cost curve above shut down point ©. Marginal utity curve 4. Average utility curve ©. Average variable cost curve ‘Which of the following is not a feature of perfect competition? a. Large number of seller and buyers No one is large enough to influence the market price Homogeneous products Anhorizontal demand curve Low price eaeg In the long run, a perfectly competitive firm earns only normal profits because of a. Product homogeneity b. Large number of seller and buyer in the industry ©. Free entry and exit of industry 4d. Both (@)and (b) above @. Both (b)and (c) above ‘The horizontal demand curve for a firm is one of the characteristic features of 8. Oligopoly b. Monopoly . Monopolistic competition 156 AssignmentManagerial Economics 4. Perfect competition . Duopoly 26. A perfectly competitive firm can increase its sales by | a. Reducing the price . Increasing the price . Increasing the production 4. Incteasing the expenditure of advertisement fe. Increasing the sales force 27. Which of the following is not a source of market imperfection? a. Technology Size of the firm Product differentiation Availability of resources Forces of supply and demand paes 28. The maximum profit condition for a monopoly firm is a. Total cost should be minimum b. Total revenue should be maximum c. Marginal revenue is equal to marginal cost 4. Quantity should be maximum . Price should be maximum 29. *Four-firm concentration’ refers to ‘The number of firms in an industry b. The fourlargest fim in four different and important industries in an economy ¢, The number of industries in an economy which have only four firms 4 e. > ‘The percent of the total industry output that is accounted for by the largest four firms ‘The percent of the total industry output that is accounted for by the largest four firms Market inefficiencies can come from a. Externalities b, Monopolies ©. Imperfectinformation dd. Entry barriers ©. Alloftheabove 31. Amonopolist who faces a negatively sloped demand curve operates in the region where the elasticity of demand is a. Less than 4 Equal to 1 Greater than 1 between 0 and 1 0 Assignment — 157Managerial Economics 32. 33, 35, In which of the following market structures the entry is least difficult? | ‘a. Monopoly b. oligopoly cc. duopoly 4d. regulated monopoly fe. monopolistic competition Which ofthe follow is false in a monopolistic competition? a. Many buyers and sellers Identical products Easy entry and exit Price of the competitor is the benchmark price Each firm could be market leader in its product segment The term “ifferentiated product” denotes ‘a, Different products in similar packets Different products ‘Same product used in different applications Different products used by a differentiated set of people Products whose important characteristics vary eaog ‘Which of the following is common feature in both a monopolistic competitive market and oligopoly market? Product differentiation Interdependence among member firms Kinked demand curve Limited number of sellers Entries blocked eanoge 36, The term ‘collusion’ refers to 37, 38. a. Asituation in which government sets prices with the market leader in oligopoly b. Asituation in which government jointly sets prices with the small players in an industr society c. Asituation in which all firms in an industry decide the price and output ‘Asituation in which two powerful groups in an industry hand with government to rule the industry A situation in which central and state government jointly decide price and output for an industry the larger interest of the Which of the following does not likely to lead to the failure collusive oligopoly? a. Secret price cutting More number of frms Undifferentiated produets Rapidly changing technology Competition from foreian firms eaoe Price leadership refers to a. Pre-emptive pricing made possible by the leaming curve 'b. A form of price collusion 4158 AssignmentManager! Eeononies ©. The maintains of a monopolistic price 4. Cutthroat competition None ofthe above 39, Acartel is @ _Agroup firms which get together and make joint price and output decisions to maximize joint profits b. Form of tacit collusion © Type of cligopoly in which curve is kinked 4. Duopoly 2. None of the above 40. A zero-sum game is one in which a. The gain of one player equals the loss of another player b. The gain of one piayer will not equal the loss of another player cc. The maximin equals the minimax 4, The maximin does not equal the minimax 6. The equilibrium and the dominant equilibrium are the same Assignment — 159