CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR, PATNA- 800001

End Semester Examinations - December, 2020
3rd Semester
B.B.A., LL.B. (Hons.)
MANAGERIAL ECONOMICS
Total Time: 3 hrs. Maximum Marks: 60
Answer all Questions. Roll No. - _______
Figures in the brackets indicate full marks.
Group A: Each answer should not be more than 300 words (5x6= 30 Marks)
1. What are the government responses to internalizing the externalities?
2. What are assumptions taken for cardinal utility?
3. Explain the invisible hand. In which type of economy will it work?
4. What are the determinants of price elasticity of demand?
5. Differentiate between Cournot’s equilibrium and Bertrand’s equilibrium.

Group B: Each answer should not exceed 400 words (2x10= 20 Marks)
6. A labour union of a firm is negotiating a new five-year settlement regarding payments with the
management. The union has the following option: ‘A1: AGRRESIVE BARGAINING A2
BARGAINING WITH REASON AND A3 CONCILIATORY APPROACH. The likely mode of
responses from the management are B1: AGRRESIVE BARGAINING: B2 BARGAINING WITH
REASON B3 LEGALISTIC APPROACH B4: CONCILIATORY APPROACH. The pay offs are
indicated in the table.

MANAGEMENT

B1 B2 B3 B4

A1 35 35 22 35

U
N
I A2 25 14 18 20
O
N

A3 25 44 11 10

a. Solve the game? What is the strategy for the Management and Union?
b. Explain the type of game? What is saddle point?
 7. India faced a steep inflationary pressure right from the beginning of the year 2008. In May 2008,
inflation touched double digit figures and continued to move in an upward direction. The inflatio n
was feared to choke the steady growth of the Indian economy. In July, the Reserve Bank, the central
bank of India, also took action to tame the inflation as soon as it reached a thirteen year high, crossing
12.5%. RBI increased the repo rate and cash reserve ratio to indicate a tight monetary policy to be
implemented. The central bank was able to withdraw a substantial amount of money through the tight
monetary policy. However, this raised anguish and anger among the industrialists and business me n
in India. The tight monetary policy was viewed as a double whammy in the face of rising inflatio n.
Some feared that the policy would hamper the business environment and affect the price sensitive
sectors like manufacturing, automobiles and real estate etc. On the other hand, some economists
argued that RBI's step was appropriate and quite expected. Those who are in favour of the policy
believed that tight monetary policy would be an obstacle to economic growth in the short run, but
would improve the growth prospects of the economy in the long-run..

a. Do you agree with the above steps of RBI? Give reasons

b. How would you tackle the same situation?

Group C: Answer should not be more than 600 words (10 Marks)
8. Explain briefly, short term production function, using one variable and two variables.