— PRESIDENCY COLLEGE —— SE CETTE Se en ne eemaairen ev ane Wisma aease ne 21M107.1C reono: [TT TTTTITI END TERM EXAMINATION MAY 2022 MBA - I SEMESTER PM107.1C: MANAGERIAL ECONOMICS Duration: 3 Hours ‘Max Marks: 70 Instruction: Answers should be written in English only. PART-A Answer any FIVE questions. Each question carries FIVE marks, (5X 5-25) 1. Elaborate the relevance of economies of scale in business decisions. (CO S/Evaluating) 2. Identify the key differentiator between monopoly and monopolistic competition. Explain with an example. (CO 3/Applying) 3. List out the various determinants of (a) demand and, (b) supply. (CO 2/Understanding) 4. What is the difference between isoquants and isocosts? (CO 3/Applying) 5. Can Government intervention help in controlling markets and in regulating prices? Support your answer. (CO 5/Evaluating) 6. Briefly explain the cardinal and ordinal utility approaches to consumers equilibrium. (CO 2/Understanding) 7. Explain the law of demand? (CO 2/Understanding) PART-B Answer any THREE questions. Each question carries TEN marks. (3X 10-30) 8. Why do you think there are not much profits for farmers in Indian context while farmers in other advanced countries make profits? Use the concepts discussed in the course for your explanation, (CO 4/Analyzing) 9. Illustrate with an example, the application of the law of diminishing marginal utility in managerial decision making. (CO 4/Analyzing) 10. Explain the significance of revenue curves, and the relationship between cost and revenue curves. (CO 3/Applying) 11, Demonstrate with an example, the utilities of cost minimization v/s output maximization concept. (CO 3/Applying) Page 1of2PART-C (CASE STUDY- COMPULSORY) Answer the following question. Question carries FIFTEEN marks. (1X 15-15) 12. Monopolistic competition refers to a market where many firms sell differentiated products. Differentiated products can arise from characteristics of the good or service, location from which the product is sold, intangible aspects of the product, and perceptions of the product. ‘The perceived demand curve for a monopolistically competitive firm is downward-sloping, which shows that it is a price maker and chooses a combination of price and quantity. However, the perceived demand curve for a monopolistic competitor is more elastic than the perceived demand curve for a monopolist, because the monopolistic competitor has direct competition, unlike the pure monopolist, A profit-maximizing monopolistic competitor will seek out the quantity where marginal revenue is equal to marginal cost. The monopolistic competitor will produce that level of output and charge the price that is indicated by the firm’s demand curve. If the firms in a monopolistically competitive industry are eaming economic profits, the industry will attract entry until profits are driven down to zero in the long run. If the firms in a monopolistically competitive industry are suffering economic losses, then the industry will experience exit of firms until economic profits are driven up to zero in the long run, ‘A monopolistically competitive firm is not productively efficient because it does not produce at the minimum of its average cost curve. A monopolistically competitive firm is not allocates efficient because it does not produce where P = MC, but instead produces where P > MC. Thus, a monopolistically competitive firm will tend to produce a lower quantity at a higher cost and to charge a higher price than a perfectly competitive firm. a, Suppose that, due to a successful advertising campaign, a monopolistic competitor experiences an increase in demand for its product. How will that affect the price it charges and the quantity it supplies? (CO 5/Evaluating) b. Continuing with the scenario outlined in question 1, in the long run, the positive economic profits eamed by the monopolistic competitor will attract a response either from existing firms in the industry or firms outside. As those firms capture the original firm’s profit, what will happen to the original firm’s profit-maximizing price and output levels? (CO 5/Evaluating) deeeeenee Page 20f2