Examination: Final Term

Course: Managerial Economics

Total Marks: 44
Total Time, 3 Hours
Instruction:
Understanding of Question is part of the examination.
Use of Mobile phone and other materials which provide helps in the solution of paper are strictly
prohibited. If anyone found using mobile phone, paper will be cancelled.
Each question carries equal marks. Write precise answer and clear hand writing.
Question No 1:
(i) What is Agency Theory? What type of cost incurred by principle in attempt to push
agent to act in the best interest of principle?

(ii) If cost of internal transaction is greater than cost of external transaction. The size of
the firm should be increased or decreased from view point of cost minimization? Also
discuss the point where size of the firm is optimal.
Question No 2:
(i) What is cross price elasticity of demand? Discuss the decision criteria of cross price
elasticity of demand.
(ii) What is income elasticity of demand? Also explain its decision criteria.
Question No 3:
(i) What is demand forecasting. Discuss in detail market survey method of demand
forecasting.
(ii) What is market demand. Discuss the controllable vs non-controllable factor of market
demand.
(iii)
Question No 4:
Explain the following properties of indifference curve.
1. Indifference curve is convex to the origin
2. Two indifference curves of an individual cannot intersect.
3. Slop of indifference curve