MANAGERIAL ECONOMICS (20MBA12)

Important Questions
Module 1
3 Marks
1. Define Managerial Economics.
2. How positive economics is different from normative economics?
3. Define Economics.
7 Marks
1. Discuss the forms of External Economics
2. Discuss the Nature of Managerial Economics.
3. Explain Baumol’s model of Sales Maximization.
4. Elaborate Williamson’s theory of maximization of managerial utility function.
5. Explain the concepts of Macro Economics and Micro economics.
6. Relate the principal agent problem with Williamson’s theory of maximization of
managerial utility function.
10 marks
1. Describe the nature and scope of managerial economics in relation to business and
industry.
2. “Managerial Economics is the integration of economics theory with business practice
for the purpose of facilitating decision making and forward planning by
management. Explain. – Answer: Write only steps in decision making process, scope
of ME with 2 lines explanation, relationship of ME with functional areas of the
business (list out, don’t explain).
3. Explain five fundamental principles of managerial economics.
4. Explain the steps of decision-making process, with a suitable example.

Module 2
3 Marks
1. Define Elasticity of Demand.
2. State the Law of Supply.

7 Marks
1. Suppose the price of a commodity falls from ₹6 to ₹4 per unit and due to this,
quantity demanded of the commodity increases from 80 units to 120 units. Find out
the price elasticity of demand.
2. Explain the types of Price Elasticity with diagram and example.
3. Explain the various determinants of supply?

10 Marks
1. Discuss the tools of Credit Control.
2. Explain Cross Elasticity of demand. Explain its uses.
 3. Critically analyse the advantages and disadvantages of quantitative and qualitative
methods of demand forecasting.

Module 3
3 Marks
1. Define Opportunity Cost
2. Define ISO-QUANTs.
3. Distinguish between substitutes and Complementary goods with example.
4. What is Income Elasticity of demand?
5. State the law of demand.
6. What is Economies of Scale?
7. What is Contribution? (Ans: S-VC = C)
8. What do you understand by the term “marginalism”?
9. What is Marginal rate of technical substitution (MRTS)?

7 Marks
1. Narrate the features of Perfect Competition.
2. Explain the law of variable proportion with the help of diagram.
3. Discuss the various concepts of Cost.
4. There are few Exceptions to the law of demand What are they? Explain.
5. Briefly explain economies and dis-economies of scale.
6. What is Iso-Quant curve? Briefly explain its properties.
7. What is the use of Break-Even analysis in Managerial decision making?

10 Marks
1. Discuss the different methods available for Demand Forecasting.
2. Construct a Break-Even Chart and explain its assumptions and its managerial
significance.
Or
Explain with graph how to access profits and apply BEP for decision making using
linear

3. Depict and explain various stages of law of returns to scale graphically.

Module 4
3 Marks
1. What do you by “Envelop Curve”?
2. Define Cartel.
3. Define “Loss Leadership”.
4. What is Indifference Curve?
7 Marks
1. What are the features of perfect Competition? Explain how price is determined
under perfect competition in short run.
2. Explain the features of Monopolistic competition.
3. Briefly explain the various factors which determine the formation and sustainability
of cartels.

10 Marks
1. Discuss the price and output determination under monopoly in the short run.
2. Explain with the help of diagram “Kinked Demand Curve”.
3. A firm under perfect competition is a price taker and not price maker explain.

Module 5
3 Marks
1. What is Business Environment?
2. Which are the three sectors of Indian Economy?
3. Expand GDP? What are its components? GDP= C+I+G+(X-M)

7 Marks
1. What is PESTEL analysis? Explain its significance in macro-economic analysis.
2. Explain in detail the Nature of Business Environment.

10 Marks
1. Elucidate the internal and external Business Environment.
2. Analyse the Strength and opportunity of Indian Economy. (SWOT)

Module 6
3 Marks
1. What is a Monetary Policy?
2. What is Union Budget?
3. What is the difference between Open and Closed Economy?
4. What do you understand by the term “Fiscal Policy”?

7 Marks
1. Explain the features New Industrial Policy of 1991.
2. Explain in detail the Credit Control tools used by RBI.

10 Marks
1. Write a note on the Impact of WTO on India’s foreign trade.
2. Discuss the various methods of measuring the national income.
Case Studies:
1.

2.
ABC Company is an industrial manufacturing unit specializing in one particular product used in
automobile industry, very few competitors are there in market. Prices are fairly stable. The company
is thinking of reduction in price in order to enhance its market share.

1. What type of market is the company in? (5 Marks)

2. Will a reduction in price enhance the market share as expected by the company ? (5 Marks)

3. What strategy would you suggest to increase its market share without reducing the price? (10
Marks)

3.

Based on the general features and facilities offered, the Ministry of Tourism Govt. of India classifies
hotels into 7 categories: five star deluxe, five star, four star, three star, two star, one star and
heritage hotels. These apart, there are hotels in the unorganized sector that have a significant
presence across the country and cater primarily to economy tourists. Encouraged by the boom in
tourism and increased spending on leisure, there has been an influx of globally renowned groups by
way of joint ventures. The premium and luxury segment (high end 5-star deluxe and 5 star hotels)
mainly cater to the business and up market foreign leisure travelers and offer a high quality and
wide range of services. These constitute about 30 percent of the hospitality industry in India. The
mid-market Segment (3 and 4 star hotels) offers most of the essential services of luxury hotels
without the high costs, since the tax component of this segment are lower compared with the
premium segment. The budget segment comprises 1 and 2 star hotels, which provide Affordable
accommodation to the highly price-conscious segment of travelers. Heritage Hotels are
architecturally distinctive properties such as palaces and forts, built prior to 1950, that have been
converted into hotels. In the face of stiff competition, hotels in India have come up with ingenious
ways to attract customers. These hotels distinguish themselves with beds, bathroom, amenities and
complementary breakfast. Other facilities may include innovations in food and beverage products,
spa, fitness centre or other lifestyle facilities. The ongoing revolution in cuisine has been
accompanied by innovations such as free standing, niche restaurants.

Questions:

A. Do you think the hotel industry is monopolistically competitive? What are the features of industry
which suggest the same? (10 Marks)

B. Comment on differentiation offered by the hotels in India. (10 Marks)

Don’t refer the market, but the concept.

Case study: prepare well for BEP problems as well as refer the theoretical cased discussed in
the class as well as shared herewith.

Wish you all the very best. Do well in the exam.

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