MB-102

Sl.No. : Total No. of Pages : 3

First Semester M.B.A. Degree Examination, March - 2020

Course - 2 : MANAGERIAL ECONOMICS

Time : 3 Hours Max. Marks : 80

Instruction : Answer all sections.

SECTION-A

Q1) Answer any five sub-questions. Each sub-question carries 3 marks. [5 × 3 = 15]
a) What is the role of managerial economics in preparing managers.
b) What is elasticity of demand.
c) What is the significance of market analysis to a manager?
d) Distinguish between fixed and variable costs.
e) What is monopolistic competition?
f) Define product Bundling.
g) Differentiate between macroeconomics and microeconomics.

SECTION-B
Answer any four questions. Each question carries five marks. [4 × 5 = 20]

Q2) State and explain the factors which you would normally consider while pricing a
new product.

Q3) Why a firm under perfect competition is described as a price maker? Reduce its
equilibrium conditions in the short run.

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Q4) What are the conditions necessary for the existence of a perfect competitive market?

Q5) What is short - run cost analysis? For what type of decisions it is useful.

Q6) What is meant by economics of scale? Give examples.

Q7) What are the criteria of a good forecasting method?

SECTION-C
Answer any three questions. Each question carries 10 marks. [3 × 10 = 30]

Q8) Explain the factors on which the demand for a commodity depend?

Q9) Explain the concept and use of break even analysis.

Q10)Define price elasticity of demand and distinguish its various types. Discuss the
role of price elasticity of demand in managerial decisions.

Q11)Differentiate between the different forms of market structure.

Q12)What are the impacts of globalisation in Indian business?

SECTION-D
Q13)Case : (Compulsory) [1 × 15 = 15]

Price and Income Elasticities of Imports and Exports in the Real World :
The price elasticity of demand for U.S. manufactured imports has been
estimated to be about 1.06, both in the short run and in the long run. That is, a 1
percent decline in the dollar price of U.S. imports of manufactured goods can be
expected to lead to a 1.06 percent increase in the quantity demanded and thus leave
their dollar value practically unchanged in the short run, as well as in the long run.
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On the other hand, the price elasticity of demand for U.S. exports of
manufactured goods was estimated to be 0.48 in the short run and 1.67 in the long
run. This means that a 1 percent decline in the price of U.S. exports can be expected
to lead to an increase in the quantity of U.S. manufactured goods exports of 0.48
percent within a year or two of the price change and 1.67 percent in the long run
(i.e., in a period of five years or so). Thus, a decline in U.S. export prices leads to
U.S. earnings from manufactured exports to fall in the short run and to rise in the
long run.

Finally, the income elasticity of demand for imports was estimated to be 1.94
in the United States. This means that a 1 percent increase in U.S. income or GNP
can be expected to lead to an increase of about 1.94 percent in U.S. imports.
Thus, U.S. imports are normal goods and can be rgarded as luxuries. The income
elasticity of imports for the other six largest industrial countries (Japan, Germany,
France, the United Kingdom, Italy, and Canada) ranges from 0.35 for Japan to
2.51 for the United Kingdom. On the other hand, the income elasticity of exports
ranges from 0.80 for the United States to 1.60 for Italy.

The price and income elasticities of imports and exports are important to
individual consumers and producers in the United States and abroad, and affect
the level of economic activity in all the nations engaging in international trade.

Questions :
1) From the above case, how do you analyse the price as well as income elasticities
of demand?
2) How does the estimation of income elasticity of demand helps in import?
3) How does the estimation of price elasticity of demand helps in export?

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