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MBA I semester ME (2008-09) Important Questions

Unit 1 (1) Define Managerial Economics. Describe the nature and scope of managerial economics. (Or)) Managerial Economics is the application of Economics in analyzing business decisions. Describe the types of economic analysis applied and the types of business decisions analyzed in Managerial Economics. (2) What is managerial economics? What types of issues come under purview of managerial economics? (Scope of managerial economics). (3) Managerial Economics is prescriptive rather than descriptive in character. Discuss. (4) Define economics and distinguish carefully between positive economics and welfare economics. (5) Business economics has a close connection with micro-economic theory, macroeconomic theory, the theory of decision-making, operations research and statistics. Elucidate. (Or) Explain the linkages Managerial Economics has with other disciplines. (6) What is the role of a managerial economist in a firm? Discuss in detail. Unit 2 (1) Discuss the profit maximization theory. (2) Do you agree with the view that separation of ownership and management introduces a change in decision - making process? Develop your argument in the light of any behavioral theory of the firm. (2) Describe in detail Baumols model (Revenue Maximization model). (3) Describe various behavioural theories of the firm. (4) Explain in detail the Linear Programming Technique stating clearly its assumptions, scope and benefits. Unit 3 (1) Explain (i) Opportunity cost concept; (ii) Incremental cost concept; (iii) Marginal concept, marginal utility and equi-marginalism. (2) The discounting principle and incremental cost concept are both special applications of opportunity cost reasoning. Explain. Unit 4 (1) What is demand? Discuss the demand determinants and their influence on the quantity demanded. (2) What are the various factors that determine the demand for a mobile phone?

MBA I semester ME (2008-09) Important Questions

(3) State and explain the Law of Demand. What are the exceptions to the Law of Demand? (4) Distinguish between :(a) Autonomous demand and Derived demand; (b) Short-Term demand and long-term demand and (c) Industry demand and firm demand (5) What is demand elasticity? Describe the degrees of demand elasticity. (6) What is elasticity of demand? How do you measure price elasticity of demand? (7) What do you understand by elasticity of demand? Explain the factors governing it. (8) Explain in detail (i) Price elasticity of demand; (ii) Income elasticity of demand; (iii) Cross elasticity of demand and (iv) Advertising / promotional elasticity of demand. (9) Define demand forecasting. Describe the survey methods of demand forecasting. (10) Describe the statistical methods of demand forecasting. (11) What is the Law of Supply? What are its assumptions? Explain the exceptions to the law of supply. Unit 5 (1) Discuss the properties of Iso-quants. Explain the laws of returns to scale (or) Explain the law of variable proportions. (2) Define and provide diagrammatic representation for each one the following: (a) Diminishing Returns; (b) Constant Returns; and (c) Increasing Returns. (3) Explain the concepts of isoquants and isocosts. Analyze how the manufacturer reaches the least cost combination of inputs. Illustrate. (or) Explain the production function with two variable inputs. (4) What is a production function? Explain the different types of production function. (or) Explain (i) Linear production function; (ii) Power production function; (iii) Quadratic production function; and (iv) Cubic production function. (5) Discuss the Cobb-Douglas production function in detail. (6) Explain the economies and diseconomies of scale. Unit 6 (1) Trace the shape and relationship between total cost, average cost and marginal cost curves. (2) What are cost determinants? Examine the conditions essential for cost reductions. (3) Distinguish between: (i) Opportunity cost and Actual cost; (ii) Direct costs and Indirect costs; (iii) Incremental costs and sunk costs; (iv) Historical costs and Replacement costs. (4) Distinguish between: (i) Urgent costs and Postponable costs; (ii) Fixed costs and Variable costs; (iii) Short-run costs and long-run costs; (iv) Shut-down costs and Abandonment costs. (5) Explain cost-output relation in the short-run. (6) Explain cost-output relation in the long-run Unit 7 (1) Examine the significance of a firms kinked curve in the theory of price under Oligopoly. (2) What are the features of perfect and imperfect competition? Illustrate.

MBA I semester ME (2008-09) Important Questions (3) What is Perfect Competition? What are the essential conditions of perfect competition?

How do you determine price in perfect competition? (4) (a) What are the causes for emergence of monopoly? (b) Explain price discrimination. What is the basis for price discrimination? When is price discrimination followed? (or) What is price discrimination? Discuss different ways of price discrimination. (5) (a) What are the causes for the formulation of a monopoly? (b) Discuss how the monopolist can formulate output and pricing decisions in the short run period. (6) What are the features of monopolistic competition? How is it different from monopoly? (7) What are the features of monopolistic competition? How is it different from perfect competition? (8) Explain any four methods of strategy based pricing. (9) Write short notes on: a. Product differentiation b. Market Skimming c. Super normal profits d. Shut down price Unit 8 (1) Critically examine the Dynamic Theory of Profits by Clark.
(2) Profit is the reward for successful innovation. Elucidate.

(3) To reach Break Even Position means to reach zero point. In the light of the above statement, explain how output, cost and revenue relationship can be established. What are its limitations? Use suitable diagrams. (4) Break even analysis provides the management with a simplified frame work for an organization which is thinking on a number of problems. Discuss (or) Explain the utility of Break-Even Analysis in managerial decision-making. Explain the Break Even Chart. (5) State the assumptions in Break- Even Analysis. Explain how managers in their day-today operations use break- even analysis. Explain the limitations of break- even analysis. (6) How do you determine BEP in terms of physical units and sales value? Explain the concepts of margin of safety and the angle of incidence. Illustrate. (7) The following information is given about two companies in Financial Year 2004-2005.
Particulars Sales Fixed Expenses Variable Expenses Company A Rs 50,00,000 Rs 12,00,000 Rs 35,00,000 Company B Rs 50,00,000 Rs 17,00,000 Rs 30,00,000

MBA I semester ME (2008-09) Important Questions

Find (a) p/v ratio; (b) Break-Even Point; (c) Margin of Safety and (d) Profit for each of the companies.

(8) A company reported the following results for two periods:

Period I II Sales (Rs) 20,00,000 25,00,000 Profit (Rs) 2,00,000 3,00,000

Ascertain (Determine) the BEP, p/v ratio, Fixed Cost and Margin of Safety. (9) Sales are Rs 1,10,000 yielding a profit of Rs 4,000 in Period I. Sales are Rs 1,50,000 yielding a profit of Rs12, 000 in Period I. Determine Break-Even Point and fixed expenses. (10) The p/v ratio for m/s Matrix Books Ltd is 40% and the margin of safety is 30%. Work out the BEP and net profit if sales value is Rs 14,000. (11) A company prepares a budget to produce 3 lakh units of a product with fixed costs as Rs 15 lakhs and average variable cost of Rs 10 each. The selling price is to yield 20% profit on cost. Calculate (a) p/v ratio and (b) break-even point. (12) If sales are 10,000 units, selling price is Rs 20 per unit, variable cost is Rs 10 per unit and total fixed costs are Rs 80,000,find: a. BEP in units and sales value; b. Profit earned; and c. Sales required to earn a profit of Rs 60,000. (13) Sale of a product amounts to 200 units per month at Rs 10 per unit. Fixed overheads are Rs 400 per month. Variable cost is Rs 6 per unit. There is a proposal to reduce prices by 10%. Calculate present and future p/v ratios. How many units must be sold to earn a target profit of present level? (14) Explain Schumpeters Innovation Theory of profit. (15) (16) What is the role of profit? Explain some important theories of profit.