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June 2013 Managerial Economics (C8) Maximum marks: 10 Duration: 1 Hour

Note: Attempt all question, each carries equal marks. (10 Questions) Q.1. Managerial economics deals with the problem of a) b) c) d) An individual firm An industry An economy Global economy 1 mark

2. In case of increase in demand, the demand curve a) b) c) d) Shifts backwards Shifts forward Will have upward slope Will be horizontal

3. Monopolistic Competition means a) b) c) d) Large number of seller Product differentiation Free entry & exit of Firms All of the above

4. A firm operating under conditions of perfect competitions can a) b) c) d) Determine the price of its product. Determine only the size of its output. Promote the sales through effective advertisement. Capture the market by cutting down the price.

5. When elasticity of demand is one, MR is........... a) b) c) d) Zero Positive Negative Maximum

6. Production function explains a) The relationship between Qty of inputs employed and the corresponding total production cost. b) The relationship between the firms total revenue and total production cost. c) The relationship between qty of inputs used and the corresponding output obtained. d) The relationship between market price charged and quantity supplied. 7. Profit-maximising firms want to maximize the difference between a) b) c) d) Marginal revenue and average cost Marginal revenue and marginal cost Total revenue and total cost Total revenue and marginal cost

8. If the proportional increase in all inputs is equal to the proportional increase in output, returns to scale are _____. a) b) c) d) Decreasing Increasing Constant Variable

9. If the price is less than the average costs but higher than the average variable costs: a) b) c) d) The firm is making a loss and will shutdown in the short term The firm is making a profit The firm is making a loss but will continue to produce in the short term The firm is making a loss and is making a negative contribution to fixed costs

10. Production function with two input variables can be understood through: a) b) c) d) Law of variable proportion Isoquants Both None

GROUP B Long Answers Note: Attempt any 1 out of 8, all question carries equal mark. 1. 2. 3. 4. 5. 6. 7. What are the various methods to measure national income? Explain the Law of Demand. What is the significance of managerial economics? Explain the limitations of Law of Diminishing Marginal Utility Evaluate the managerial uses of break-even analysis. Define demand forecasting Write short notes on 2 Mark each

a) Monetary policy b) Fiscal policy 8. What are the factors of production?

GROUP C Long Answers Note: Attempt any 1 out of 5, all question carries equal mark. 8 Mark each

1. Define the break-even point. What are the managerial uses of break-even analysis? 2. Define managerial economics. Indicate the nature and scope of managerial economics. 3. Distinguish between a) A Price elasticity and income elasticity b) Monopolistic competition and Oligopoly 4. Explain the relationship between average revenue and marginal revenue curves under perfect competition and imperfect competition. 5. Explain the Meaning and condition of equilibrium of the firm as an Objective, based on Market competition.

GROUP D Case Study Case Study 10 Mark

Your college sports club is planning a party as a fund raiser. You are planning a menu for the party. You must determine the fixed and variable costs of the party. You must categorize the menu items needed into either fixed or variable cost. You must decide on the ticket price you are going to charge for each person attending. Your tasks are to: - Determine the number of people who must attend so that your club breaks even on the party. - Determine the number of people who must attend if your club wishes to make a profit of Rs.1, 000 on the party.

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