Seat B Unique Paper Code: 61011203 Name of the Paper: Managerial Economics Name of the Course: BMS Semester: It Duration: 3 Hours Maximum Marks: 75 Instructions for Candidates 1. Attempt ANY Four Questions. 2. All Questions carry equal marks. I.How would the demand curve for Guitars get affected when Guitar lessons become cheaper? Show graphically. Does the elasticity of the demand curve also get affected? How? If prices of Guitar lessons change by -5%, there is an increase in demand for Guitars equal to +10%, what is the cross- elasticity of demand for Guitars? What is the equilibrium condition for simultaneous general equilibrium of Production and Exchange? Explain using Production Possibility curve and Edgeworth Box diagram, 2. Describe the shape of an indifference curve for two commodities, Jeans and Trousers. Can two indifference curves intersect? Give reason why? What is an Engel curve? For two commodities such as public transport and private vehicle how could consumer equilibrium change with a rise of income level for a low-income consumer? Derive the Engel curve in this case using indifference curve framework, What is Consumer Surplus? 3. A firm produces a product in a competitive industry and has a total cost function C=50 +4q+2q square and marginal cost function MC=4+4q, At the given market price of 20, the firm is producing 5 units of output. Is the firm maximizing its profit? What quantities of output should the firm produce in the long run? Also explain graphically 4. A firm under oligopoly would be unable to vary its price in response to change in Marginal Costs. Explain why there could be price rigidity in an oligopoly. Also explain prisoners’ dilemma. 5. Suppose, the production of a cosmetic good requires two inputs “W" and ‘2’ with no substitutability between the inputs. What will be the shape of the isoquant curve in this case? The spacing between the isoquant curves provides erucial information about the production process. What is this information? Explain using diagrams. 6. Describe the relationship between marginal product of labour and marginal cost. In a production process, suppose a rupee spent on labour gives higher marginal product than if the rupee is spent on capital. What should the producer do in this case? “The producer plans in the long run and operates in the short run’, With reference to this statement, explain the relationship between the relevant cost curves.Name of the Course: BMS (CBCS(2015)) ‘Semester. Il (2020) Duration. 2 Hours Maximum Marks: 75 Instructions for Candidates 1. Attempt ANY Four Questions 2. All Questions carry equal marks. 1. Can a product having negative income elasticity of demand, exhibit a positively sloped demand curve? Explain using diagrams, 2 Suppose a fim in a long nun consiant cost industry with ATC(q)=2000/q+100+5q_ and MC(q)= 100+ 10g, ‘What will be the long run equilibrium price? ‘The demand for industry output has just increased, if the market price initially rises to Rs.600, how much ‘each firm in the long run will produce? 3. Monopoly is said to be economically inefficient, Explain and show how it imposes social cost. 4. Modem empirical studies have found that long-run average cost curve (LAC) is L-shaped. How would ‘you explain it? Does it contradict the U-shaped long-run average cost curve of the traditional cost theory? fe Reasons 5. The demand for Labour is a derived demand. Explain how the demand curve for Labour can be constructed, 6. During their annual sale, a liquor store gives a discount of 10 percent per bottle of wine if you buy one to five cases, and 20 percent if you bay more than five cases. The liquor store is practicing which type of Price discrimination. ExplainUnigue Paper Code 101203 Nan of the P Mas Name of the Course Bachelor of 4 studi ccnes) Semester " Duntioe 3 Hours ‘Maxizium Marks % Instructions for Candidates Write your Roll No, on the top inediately on receipt of this question paper All questions are compulsory, ANN questions carry egual uch 1 Anwwer any the of the following : (9) Why does fn facing neyutively sloped demand ‘curve never produce in inelati pomien of demand (tb) Explain what is meas by “Comtnned optimization” Fro. 2842 2 2842 3 (©) What wil be (6) What inthe new wildy maximizing quantity whote Pree & (of X and ¥ following the increase in the axis price of X7 ° (© Would you recommend » producer t9 prod less oF sume Level of output sf currently MReMCT Why? G=s-15) State how the law of diminishice returns is fcflected in the shape of the total product curve 5 the relation between diminishing the sages of predaction? 8) 2G) Is positive income elasticity of demand only aecessary condition fer inverse relation between price and quantity demanded of «product? Explain using indifference curve tealgue o (0) A fires faces the followits demand curve P= 120- 0.029 where Q in wectly prodvction and P is price, measured in Rupees per unit. The firm's by C= 609 + 2500, Assume ‘thatthe firm maximizes profits, What fof production, price and total profit per week? cont function is giv he level ou ler what conditigns should » frm con produce i short ean if it ipeurt Loses at the best evel of euipur? oR or Discuss long run supply curve of a decreasing cost industry uader perfect competion. 7) Problem: Assume a person his a utility fonction U> XY, and money income of $10,000, facing an i and price of ¥ of $15.16 (2) Why does price leadership sometimes evolves in ligopolisie markets? Explain now a price lender Initial price of X of § the price of X increnses to $15, answer the determines a profit maximixing price following questions () How does expenditure on reneateh and (What was the inti ctlty: maximizing evelopment affect the short rom equikbrium of « ‘quantity of X and Y? ‘mosopolistically competitive firm? o 2842 ‘4 5, Wete short notes om any three (1) Engel curve for piffen good ) Ditre econoiies of scope ic between economics of scale and (©) Bevctope curve. (® Why does MC intersects AVC and AC at their lowest poims xsi)